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Tourism Economics in Saudi Arabia: PP-VAR Approach

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  • Ageli, Mohammed Moosa

Abstract

In This paper investigates the nexus relationship between tourism expenditure and Non Oil economic growth in Saudi Arabia over the period 1970-2012. Using Phillips and Perron (PP) unit root test-VAR approach with several techniques including Unit root tests, Johansen’s co-integration test, Granger Causality test and Vector Error Correction Model (VECM). We used time series econometrics techniques to examine the causal relationship between tourism expenditure and economic growth in the Saudi economy. The findings reveal that there is a bilateral causality and positive long-run relationship running from Non Oil-GDP to tourism expenditure. The results obtained from the analyses show that there is a positive relationship between tourism spending and economic growth in Saudi Arabia. The development of tourism sector will thus have a positive impact on the growth of the Saudi economy. Also, the results show that, in Saudi Arabia, the model of tourism expenditure is found to hold for Non Oil-GDP.

Suggested Citation

  • Ageli, Mohammed Moosa, 2013. "Tourism Economics in Saudi Arabia: PP-VAR Approach," MPRA Paper 46602, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:46602
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    File URL: https://mpra.ub.uni-muenchen.de/46602/1/MPRA_paper_46602.pdf
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    References listed on IDEAS

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    1. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    2. 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.
    3. R. Brau & A. Lanza & F. Pigliaru, 2006. "How fast are small tourist countries growing? The 1980-2003 evidence," Working Paper CRENoS 200614, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    4. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    5. Brau, Rinaldo & Lanza, Alessandro & Pigliaru, Francesco, 2007. "How Fast are Small Tourism Countries Growing? Evidence from the Data for 1980–2003," MPRA Paper 82776, University Library of Munich, Germany.
    6. Granger, C. W. J., 1980. "Testing for causality : A personal viewpoint," Journal of Economic Dynamics and Control, Elsevier, vol. 2(1), pages 329-352, May.
    7. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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    Cited by:

    1. Gautam, Bishnu Prasad, 2014. "Economic Dynamics of Tourism in Nepal: A VECM Approach," MPRA Paper 58102, University Library of Munich, Germany.

    More about this item

    Keywords

    Tourism Expenditure; PP-VAR Approach; Phillips and Perron (PP) unit root test; Co-integration test; Vector Error Correction Model (VECM); Granger Causality; Economic Growth; Saudi Arabia;

    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
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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