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Effects of Tourism, Economic Growth, Real Exchange Rate, Structural Changes and Hurricanes in Jamaica

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  • Edward E. Ghartey

    (Department of Economics, University of the West Indies, Mona, Kingston 7, Jamaica)

Abstract

The study examines the causal relationships among changes in tourism, economic growth, the real exchange rate, structural changes and hurricanes in Jamaica from 1963 to 2008. The Johansen cointegration test and autoregressive distributed lag estimates are used to determine the long-run equilibrium relationships among the variables. In both the short term and the long run, an increase in tourism (both arrivals and real expenditures) causes expansion in economic growth, with tourist arrivals yielding more robust results. In the long run, economic growth causes appreciation (a fall in the real exchange rate), whereas tourism growth causes depreciation, although their overall combined effects are appreciation. Depreciation increases tourist arrivals and real expenditures, but has conflicting effects on economic growth. Hurricanes result in appreciation, whereas the effects of structural changes are mixed. Additionally, hurricanes result in a decline in tourist real expenditure, and cause tourist arrivals to fall briefly before reversing into a modest increase. The tourism-led economic growth findings for both the short term and long run, albeit modest, imply that it can be worthwhile to extend incentives to promote Jamaica as a tourist destination.

Suggested Citation

  • Edward E. Ghartey, 2013. "Effects of Tourism, Economic Growth, Real Exchange Rate, Structural Changes and Hurricanes in Jamaica," Tourism Economics, , vol. 19(4), pages 919-942, August.
    • Handle: RePEc:sae:toueco:v:19:y:2013:i:4:p:919-942
    DOI: 10.5367/te.2013.0228
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    References listed on IDEAS

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    5. Sung Yu-Chi, 2018. "Revisiting the Tourism-Led Growth Hypothesis in a Dual Model Using Mwald Granger Causality Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(8), pages 1102-1110, August.
    6. Chien-Ming Wang & Tsung-Pao Wu, 2022. "Does tourism promote or reduce environmental pollution? Evidence from major tourist arrival countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(3), pages 3334-3355, March.
    7. Chien-Ming Wang & Su-Lan Pan & Alastair M. Morrison & Tsung-Pao Wu, 2022. "The dynamic linkages among outbound tourism, economic growth, and international trade: empirical evidence from China," SN Business & Economics, Springer, vol. 2(11), pages 1-18, November.
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    9. Shahbaz, Muhammad & Ferrer, Román & Hussain Shahzad, Syed Jawad & Haouas, Ilham, 2017. "Is the tourism-economic growth nexus time-varying? Bootstrap rolling-window causality analysis for the top ten tourist destinations," MPRA Paper 82713, University Library of Munich, Germany, revised 04 Nov 2017.
    10. Adedoyin, Festus Fatai & Bekun, Festus Victor & Driha, Oana M. & Balsalobre-Lorente, Daniel, 2020. "The effects of air transportation, energy, ICT and FDI on economic growth in the industry 4.0 era: Evidence from the United States," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
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