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Research Note: Threshold Effects on Development of Tourism and Economic Growth

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  • Yu-Shan Wang

    (Department of Money and Banking, National Kaohsiung First University of Science and Technology, No 2, Juo-Yue Rd, Nantz District, Kaohsiung 81164, Taiwan)

Abstract

This paper uses 1996–2006 data on the top 10 countries in the 2008 Country Brand Index to examine threshold effects. When exchange rate changes are higher than the threshold value, the coefficient is positive. This means that continued tourism development can greatly enhance economic growth. If a currency continues to depreciate dramatically, the correlation between the two will disappear. The interactions between tourism development and economic growth are different under various ratio threshold values of exchange rate changes. This study shows that, if the government pays attention to trends in exchange rates and implements appropriate policies, tourism can effectively boost economic growth; at the same time, inflation suppresses economic growth. Tourism can potentially contribute to economic development and so it is advisable for governments to dedicate strategic resources to tourism in order to boost short-term economic growth.

Suggested Citation

  • Yu-Shan Wang, 2012. "Research Note: Threshold Effects on Development of Tourism and Economic Growth," Tourism Economics, , vol. 18(5), pages 1135-1141, October.
    • Handle: RePEc:sae:toueco:v:18:y:2012:i:5:p:1135-1141
    DOI: 10.5367/te.2012.0160
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    References listed on IDEAS

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    1. Hansen, Bruce E., 1999. "Threshold effects in non-dynamic panels: Estimation, testing, and inference," Journal of Econometrics, Elsevier, vol. 93(2), pages 345-368, December.
    2. Hung, Fu-Sheng, 2003. "Inflation, financial development, and economic growth," International Review of Economics & Finance, Elsevier, vol. 12(1), pages 45-67.
    3. 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.
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    Cited by:

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    2. Andrew Phiri, 2016. "Tourism and Economic Growth in South Africa: Evidence from Linear and Nonlinear Cointegration Frameworks," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 14(1 (Spring), pages 31-53.
    3. Sarantis Lolos & Panagiotis Palaios & Evangelia Papapetrou, 2023. "Tourism-led growth asymmetries in Greece: evidence from quantile regression analysis," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(1), pages 125-148, January.
    4. Jianxu Liu & Vicente Ramos & Bing Yang & Mengjiao Wang & Songsak Sriboonchitta, 2024. "Analysing the dynamic co-movement between tourism and expected economic growth considering extreme events," Tourism Economics, , vol. 30(1), pages 3-26, February.
    5. Naradda Gamage, Sisira Kumara & Kumudumali, S. H. T. & Otamurodov, Shavkat, 2020. "The Nexus between Tourism and Economic Growth: A Systematic Literature Review and Future Research Directions," MPRA Paper 104086, University Library of Munich, Germany.
    6. Jorge V Pérez-Rodríguez & Heiko Rachinger & María Santana-Gallego, 2022. "Does tourism promote economic growth? A fractionally integrated heterogeneous panel data analysis," Tourism Economics, , vol. 28(5), pages 1355-1376, August.
    7. Dogan, Ergun & Zhang, Xibin, 2023. "A nonparametric panel data model for examining the contribution of tourism to economic growth," Economic Modelling, Elsevier, vol. 128(C).
    8. Paravee Maneejuk & Woraphon Yamaka & Wilawan Srichaikul, 2022. "Tourism Development and Economic Growth in Southeast Asian Countries under the Presence of Structural Break: Panel Kink with GME Estimator," Mathematics, MDPI, vol. 10(5), pages 1-17, February.
    9. Wu, Po-Chin & Liu, Shiao-Yen & Hsiao, Juei-Ming & Huang, Tsai-Yuan, 2016. "Nonlinear and time-varying growth-tourism causality," Annals of Tourism Research, Elsevier, vol. 59(C), pages 45-59.

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