Bivariate VAR models to test Granger causality between tourist demand and supply: Implications for regional sustainable growth

Bianca Biagi () and Manuela Pulina ()

Papers in Regional Science, 2009, vol. 88, issue 1, pages 231-244

Abstract: The relationship between tourist demand and supply is investigated employing four time series models. To test for Granger causality a bivariate vector autoregression framework is used. Empirical results from each model are derived for the island of Sardinia (Italy) over the time span 1955 to 2004. The first model suggests supply is demand-driven; the second model implies a bi-directional Granger-causal relationship between demand and capacity. The third and fourth models indicate demand is quality-driven. This empirical finding implies that an environmental conservation policy may be feasible without compromising the number of tourists visiting Sardinia and hence its economic growth. Copyright (c) 2008 the author(s). Journal compilation (c) 2008 RSAI.

Date: 2009
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