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Tourism, real output and real effective exchange rate in Malaysia: a view from rolling sub-samples

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  • Tang, Chor Foon

Abstract

The objective of this study is to examine the tourism-growth nexus for Malaysia with the cointegration and Granger causality tests. This study covers the monthly data from January 1989 to May 2010. The Johansen’s cointegration and the residuals-based test for cointegration with regime shift consistently suggest that tourist arrivals, real output, and real effective exchange rate in Malaysia are cointegrated. In terms of Granger causality, this study finds different sources of causality. In the short run, real output and real effective exchange rate Granger-cause tourist arrivals, while tourists arrivals also Granger-cause real output and real effective exchange rate. In the long run, this study shows that all the variables are bi-directional causality. Moreover, we also extend the study to analyse the stability of causality between tourism and real output by using rolling regression procedure into the Granger causality test. Interestingly, the rolling Granger causality test demonstrates that the growth-led tourism hypothesis is valid and stable, while tourism-led growth hypothesis is valid and but unstable in particular after 2005. Although tourism contributes to economic growth, it is not a persistence source for long-term economic growth in Malaysia.

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  • Tang, Chor Foon, 2011. "Tourism, real output and real effective exchange rate in Malaysia: a view from rolling sub-samples," MPRA Paper 29379, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:29379
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    1. Bahman Huseynli, 2024. "The Effect of Tourism Revenues and Inflation on Economic Growth in Balkan Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 150-165.
    2. Cheam Chai Li & Rosli Mahmood & Hussin Abdullah & Ong Soon Chuan, 2013. "Economic Growth, Tourism and Selected Macroeconomic Variables: A Triangular Causal Relationship in Malaysia," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 7(2), pages 185-206, May.
    3. Osinubi, Tolulope Temilola & Osinubi , Olufemi Bankole, 2020. "Inclusive Growth in Tourism-led Growth Hypothesis: Evidence from Nigeria," African Journal of Economic Review, African Journal of Economic Review, vol. 8(2), July.
    4. Hasan Murat Ertugrul & Fatih Mangir, 2015. "The tourism-led growth hypothesis: empirical evidence from Turkey," Current Issues in Tourism, Taylor & Francis Journals, vol. 18(7), pages 633-646, July.
    5. Kubickova Marketa, 2016. "The Role of Government in Tourism: Linking Competitiveness, Freedom, and Developing Economies," Czech Journal of Tourism, Sciendo, vol. 5(2), pages 73-92, December.
    6. Shahbaz, Muhammad & Kumar, Ronald Ravinesh & Ivanov, Stanislav & Loganathan, Nanthakumar, 2015. "Nexus between Tourism demand and output per capita with relative importance of trade and financial development: A study of Malaysia," MPRA Paper 67226, University Library of Munich, Germany, revised 11 Oct 2015.
    7. Salah Eddine Sari Hassoun & Khayereddine Salim Adda & Asma Hadjira Sebbane, 2021. "Examining the connection among national tourism expenditure and economic growth in Algeria," Future Business Journal, Springer, vol. 7(1), pages 1-9, December.
    8. Ladson Pires Andrade & Hassane Mahamad Velonjara, 2020. "The Impact of Tourism on Economic Growth: A Panel Co-integration from the Community of Portuguese-speaking Countries (CPLP)," Business and Economic Research, Macrothink Institute, vol. 10(3), pages 281-291, September.
    9. Muhammad Shahbaz & Ronald Ravinesh Kumar & Stanislav Ivanov & Nanthakumar Loganathan, 2017. "The nexus between tourism demand and output per capita with the relative importance of trade openness and financial development," Tourism Economics, , vol. 23(1), pages 168-186, February.
    10. Nino Fonseca & Marcelino Sánchez-Rivero, 2020. "Significance bias in the tourism-led growth literature," Tourism Economics, , vol. 26(1), pages 137-154, February.

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    More about this item

    Keywords

    tourism-led growth hypothesis; Malaysia; rolling regression;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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