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International tourism and economic growth in New Zealand

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  • Mohammad Jaforullah

    (Department of Economics, University of Otago, New Zealand)

Abstract

This paper examines whether the tourism-led growth hypothesis holds for the New Zealand economy. Using unit root tests, cointegration tests and vector error correction models, and annual data over the period 1972-2012 on international tourism expenditure, real gross domestic product (GDP) and the exchange rate for New Zealand, it finds that the tourism-led growth hypothesis holds for New Zealand. The long-run elasticity of real GDP with respect to international tourism expenditure is estimated to be 0.4, meaning that a 1% growth in tourism will result in a 0.4% growth of the NZ economy. This finding implies that the New Zealand Government’s policy to promote New Zealand as a preferred tourism destination in the key international tourism markets may boost economic growth.

Suggested Citation

  • Mohammad Jaforullah, 2015. "International tourism and economic growth in New Zealand," Working Papers 1502, University of Otago, Department of Economics, revised Apr 2015.
    • Handle: RePEc:otg:wpaper:1502
    as

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    File URL: http://www.otago.ac.nz/economics/otago089892.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Berly Martawardaya, 2017. "Tourism and Economic Development in ASEAN 1998–2013," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 63, pages 114-125, December.
    3. Wang, Yong & Han, Linna & Ma, Xuejiao, 2022. "International tourism and economic vulnerability," Annals of Tourism Research, Elsevier, vol. 94(C).
    4. Dutta, Nabamita & Kar, Saibal, 2018. "Relating rule of law and budgetary allocation for tourism: Does per capita income growth make a difference for Indian states?," Economic Modelling, Elsevier, vol. 71(C), pages 263-271.
    5. Fieger, Peter & Rice, John, 2016. "Domestic and international visitor expenditure and growth in the Christchurch economy," MPRA Paper 75470, University Library of Munich, Germany.
    6. Nino Fonseca & Marcelino Sánchez-Rivero, 2020. "Significance bias in the tourism-led growth literature," Tourism Economics, , vol. 26(1), pages 137-154, February.
    7. 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.

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    More about this item

    Keywords

    Tourism; Economic growth; Cointegration; Granger causality; Vector error correction model; New Zealand;
    All these keywords.

    JEL classification:

    • 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
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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