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Tourism, environmental quality and economic growth: empirical evidence and policy implications

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  • M. Pulina

    ()

  • B. Biagi

    ()

Abstract

The causal relationship between tourist demand and supply is investigated employing four time series models - the first model includes nights of stay and number of supplied accommodation; the second model uses nights of stay and supplied beds (i.e. capacity); the third model employs nights of stay and the quality of supplied accommodation; finally, the fourth model includes nights of stay and the quality of supplied capacity. To test for Granger causality in the presence of a cointegration relationship between the economic variables of interest, a bivariate VAR model is used. Empirical results are from four distinctive models for Sardinia (Italy) over the time span 1955 to 2004. The first model suggests a unidirectional causal relationship running from demand to accommodation firms; the second model suggests a bi-directional causal relationship between demand and capacity. The third and fourth models indicate the existence of a unidirectional causal relationship running from quality to demand. This empirical finding implies that the environmental conservation policy (Piano Paesaggistico Regionale), adopted by the Region of Sardinia, may be feasible without compromising the number of tourists visiting Sardinia and hence, its economic growth.

Suggested Citation

  • M. Pulina & B. Biagi, 2006. "Tourism, environmental quality and economic growth: empirical evidence and policy implications," Working Paper CRENoS 200609, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  • Handle: RePEc:cns:cnscwp:200609
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    References listed on IDEAS

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    1. Granger, Clive W. J. & Huangb, Bwo-Nung & Yang, Chin-Wei, 2000. "A bivariate causality between stock prices and exchange rates: evidence from recent Asianflu," The Quarterly Review of Economics and Finance, Elsevier, vol. 40(3), pages 337-354.
    2. Gert-Jan Hospers, 2003. "Localization in Europe's Periphery: Tourism Development in Sardinia," European Planning Studies, Taylor & Francis Journals, vol. 11(6), pages 629-645, September.
    3. Isabel Cortes-Jimenez & Manuela Pulina, 2006. "Tourism and Growth: Evidence for Spain and Italy," ERSA conference papers ersa06p128, European Regional Science Association.
    4. 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.
    5. Khalid Yousif Khalafalla & Alan Webb, 2001. "Export-led growth and structural change: evidence from Malaysia," Applied Economics, Taylor & Francis Journals, vol. 33(13), pages 1703-1715.
    6. A. Lanza & F. Pigliaru, 1999. "Why Are Tourism Countries Small and Fast-Growing?," Working Paper CRENoS 199906, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    7. Oh, Wankeun & Lee, Kihoon, 2004. "Energy consumption and economic growth in Korea: testing the causality relation," Journal of Policy Modeling, Elsevier, vol. 26(8-9), pages 973-981, December.
    8. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
    9. Thornton, John, 1997. "Exports and economic growth: Evidence from 19th Century Europe1," Economics Letters, Elsevier, vol. 55(2), pages 235-240, August.
    10. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
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    Citations

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    Cited by:

    1. G. Marletto, 2007. "Crossing The Alps: Three Transport Policy Options," Working Paper CRENoS 200712, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    2. OA Carboni & G. Medda, 2007. "Government Size and the Composition of Public Spending in a Neoclassical Growth Model," Working Paper CRENoS 200701, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

    More about this item

    Keywords

    tourist demand; supply; quality; growth; granger causality;

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • 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

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