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Tourism and Growth in the Caribbean – Evidence from a Panel Error Correction Model

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  • Nicholas Apergis

    (Department of Banking and Financial Management, University of Piraeus, Karaoli and Dimitriou 80, Piraeus, Attiki 18534, Greece)

  • James E. Payne

    (Regional Vice Chancellor for Academic Affairs and Research, University of South Florida Polytechnic, 3433 Winter Lake Road, Lakeland, FL 33803, USA)

Abstract

This empirical study examines the causal relationship between tourism and economic growth for a panel of nine Caribbean countries over the period 1995–2007. Pedroni (1999, 2004) panel cointegration tests reveal a long-run equilibrium relationship between real GDP per capita, the real effective exchange rate and international tourist arrivals per capita. The panel error correction model reveals bidirectional causality between tourism and economic growth in both the short run and the long run.

Suggested Citation

  • Nicholas Apergis & James E. Payne, 2012. "Tourism and Growth in the Caribbean – Evidence from a Panel Error Correction Model," Tourism Economics, , vol. 18(2), pages 449-456, April.
  • Handle: RePEc:sae:toueco:v:18:y:2012:i:2:p:449-456
    DOI: 10.5367/te.2012.0119
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    References listed on IDEAS

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    1. Pedroni, Peter, 2004. "Panel Cointegration: Asymptotic And Finite Sample Properties Of Pooled Time Series Tests With An Application To The Ppp Hypothesis," Econometric Theory, Cambridge University Press, vol. 20(3), pages 597-625, June.
    2. Pedroni, Peter, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-670, Special I.
    3. Paolo Figini & Laura Vici, 2010. "Tourism and Growth in a Cross Section of Countries," Tourism Economics, , vol. 16(4), pages 789-805, December.
    4. Nikolaos Dritsakis, 2004. "Tourism as a Long-Run Economic Growth Factor: An Empirical Investigation for Greece Using Causality Analysis," Tourism Economics, , vol. 10(3), pages 305-316, September.
    5. Lokman Gunduz & Abdulnasser Hatemi-J, 2005. "Is the tourism-led growth hypothesis valid for Turkey?," Applied Economics Letters, Taylor & Francis Journals, vol. 12(8), pages 499-504.
    6. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
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    Citations

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    Cited by:

    1. Antonakakis, Nikolaos & Dragouni, Mina & Filis, George, 2015. "How strong is the linkage between tourism and economic growth in Europe?," Economic Modelling, Elsevier, vol. 44(C), pages 142-155.
    2. Yong Su & Jacob Cherian & Muhammad Safdar Sial & Alina Badulescu & Phung Anh Thu & Daniel Badulescu & Sarminah Samad, 2021. "Does Tourism Affect Economic Growth of China? A Panel Granger Causality Approach," Sustainability, MDPI, vol. 13(3), pages 1-12, January.
    3. Sadia Bano & Mehtab Alam & Anwar Khan & Lu Liu, 2021. "The nexus of tourism, renewable energy, income, and environmental quality: an empirical analysis of Pakistan," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(10), pages 14854-14877, October.
    4. Brito, Joao, 2015. "Country Size and Determinants of Economic Growth: A Survey with Special Interest on Small States," MPRA Paper 61273, University Library of Munich, Germany.
    5. Antonakakis, Nikolaos & Dragouni, Mina & Filis, George, 2013. "Time-Varying Interdependencies of Tourism and Economic Growth: Evidence from European Countries," MPRA Paper 48715, University Library of Munich, Germany.
    6. Antonakakis, Nikos & Dragouni, Mina & Eeckels, Bruno & Filis, George, 2015. "Tourism and economic growth revisited: Empirical evidence from a Panel VAR approach," MPRA Paper 67419, University Library of Munich, Germany.
    7. De Siano, Rita & Canale, Rosaria Rita, 2022. "Controversial effects of tourism on economic growth: A spatial analysis on Italian provincial data," Land Use Policy, Elsevier, vol. 117(C).
    8. Ioannis Kostakis, 2020. "Is Tourism a Key Factor for Economic Growth? Fresh Evidence from South Europe Using Panel Cointegration and PVAR Analyses," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 6(2), pages 123-138, December.
    9. Colin Cannonier & Monica Galloway Burke, 2019. "The economic growth impact of tourism in Small Island Developing States—evidence from the Caribbean," Tourism Economics, , vol. 25(1), pages 85-108, February.
    10. Radu Radulescu, 2020. "Granger Causality Analysis of the Economic Cycles of the Tourism Industry and the EU Regional Economy," ConScienS Conference Proceedings 014rr, Research Association for Interdisciplinary Studies.
    11. Adamopoulos, Antonios, 2021. "A System Equation Model for Tourism and Economic Growth," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 74(3), pages 311-334.
    12. Johnella Bradshaw & Simron Jit Singh & Su-Yin Tan & Tomer Fishman & Kristen Pott, 2020. "GIS-Based Material Stock Analysis (MSA) of Climate Vulnerabilities to the Tourism Industry in Antigua and Barbuda," Sustainability, MDPI, vol. 12(19), pages 1-22, September.
    13. Velisaria Matzana & Aikaterina Oikonomou & Michael Polemis, 2022. "Tourism Activity as an Engine of Growth: Lessons Learned from the European Union," JRFM, MDPI, vol. 15(4), pages 1-15, April.
    14. Can Tansel TUGCU & Mert TOPCU, 2018. "The impact of carbon dioxide (CO2) emissions on tourism: Does the source of emission matter?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(614), S), pages 125-136, Spring.
    15. Ghassan Dibeh & Ali Fakih & Walid Marrouch, 2020. "Tourism–growth nexus under duress: Lebanon during the Syrian crisis," Tourism Economics, , vol. 26(3), pages 353-370, May.
    16. Alam Rehman & Amir Ishaque & Shumaila Malik & Shams Ur Rehman & Arif Hussain & Muhammad Khan & Muhammad Zeeshan & Fakhr E. Alam Afridi, 2021. "Exploring Asymmetric Nexus Between Tourism, Economic Growth and CO2 Emissions in the Context of Pakistan," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 338-345.

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    More about this item

    Keywords

    tourism arrivals; real GDP; real exchange rate; Granger-causality; Caribbean;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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