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Modeling the Long-Run Relationship Between Exchange Rate-Tourism Pass-Through and Growth: The Case of Nigeria?

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  • Nduka, Eleanya K.

Abstract

This study was motivated by the urgent need to diversify the Nigerian economy away from oil. The economy has since the 1970s relied on revenue from oil with attendant consequences from oil price swings. Thus, the study employs the relatively new Bounds testing approach of Pesaran, Shin, and Smith (2001) with the critical values and approximate p-values developed by Kripfganz and Schneider (2018), to test the effect of exchange rate-tourism pass-through effect on growth. In the literature, the tourism-led growth has been studied for various countries. However, this study is the first to investigate the impact of exchange rate-tourism pass-through effect on growth in addition to testing their main effects. And it reveals for the first time, an exchange rate-tourism-led growth. Thus, Nigeria should adopt sound policies in the tourism sector that would make it possible to take advantage of the naira depreciation.

Suggested Citation

  • Nduka, Eleanya K., 2018. "Modeling the Long-Run Relationship Between Exchange Rate-Tourism Pass-Through and Growth: The Case of Nigeria?," MPRA Paper 86584, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:86584
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    References listed on IDEAS

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    1. Gibson Nene & Ariuna Taivan, 2017. "Causality Between Tourism And Economic Growth: Evidence From Sub-Saharan Africa (Ssa)," Journal of Developing Areas, Tennessee State University, College of Business, vol. 51(2), pages 155-169, April-Jun.
    2. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    3. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    4. Bouzahzah, Mohamed & El Menyari, Younesse, 2013. "The relationship between international tourism and economic growth: the case of Morocco and Tunisia," MPRA Paper 44102, University Library of Munich, Germany.
    5. Sebastian Kripfganz & Daniel C. Schneider, 2021. "Response Surface Regressions for Critical Value Bounds and Approximate p‐values in Equilibrium Correction Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(6), pages 1456-1481, December.
    6. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    7. Sebastian Kripfganz & Daniel C. Schneider, 2020. "Response Surface Regressions for Critical Value Bounds and Approximate p‐values in Equilibrium Correction Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(6), pages 1456-1481, December.
    8. Ogiogio, G.O., 1996. "A Statistical Analysis of Foreign Exchange Rate Behaviour in Nigeria's Auction," Papers 49, African Economic Research Consortium.
    9. Perles-Ribes, José Francisco & Ramón-Rodríguez, Ana Belén & Rubia, Antonio & Moreno-Izquierdo, Luis, 2017. "Is the tourism-led growth hypothesis valid after the global economic and financial crisis? The case of Spain 1957–2014," Tourism Management, Elsevier, vol. 61(C), pages 96-109.
    10. Edgar J Sanchez Carrera & W. Adrian Risso & Juan Gabriel Brida, 2008. "Tourism's Impact on Long-Run Mexican Economic Growth," Economics Bulletin, AccessEcon, vol. 3(21), pages 1-8.
    11. Shahzad, Syed Jawad Hussain & Shahbaz, Muhammad & Ferrer, Román & Kumar, Ronald Ravinesh, 2017. "Tourism-led growth hypothesis in the top ten tourist destinations: New evidence using the quantile-on-quantile approach," Tourism Management, Elsevier, vol. 60(C), pages 223-232.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Exchange rate; Tourism; Pass-through; Growth; Sector; Diversification.;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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