Time-Varying Linkages between Tourism Receipts and Economic Growth in South Africa

Mehmet Balcilar, Renee van Eyden (), Roula Inglesi-Lotz and Rangan Gupta

No 201363, Working Papers from University of Pretoria, Department of Economics

Abstract: The causal link between tourism receipts and GDP has recently become a major focus in the tourism economics literature. Results obtained in recent studies about the causal link appear to be sensitive with respect to the countries analysed, sample period and methodology employed. Considering the sensitivity of the causal link, we use the rolling window and time-varying coefficient estimation methods to analyse the parameter stability and Granger causality based on a vector error correction model (VECM). When applied to South Africa for the 1960-2011 periods, the findings are as follows: results from the full sample VECM indicate that there is no Granger-causality between the tourism receipts and GDP, while the findings from the time-varying coefficients model based on the state-space representation and rolling window estimation technique show that GDP has no predictive power for tourism receipts; however, tourism receipts have positive-predictive content for GDP for the entire period, with the exception of the period between 1985 and 1990.

Keywords: Tourism receipts; economic growth; time-varying causality; time-varying parameter model (search for similar items in EconPapers)
JEL-codes: C32 L83 O40 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2013-10
New Economics Papers: this item is included in nep-afr and nep-tur
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Journal Article: Time-varying linkages between tourism receipts and economic growth in South Africa (2014)
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