Tourism and Business Cycles: Does the Relationship Fade Away?

Kožić Ivan (), Vladimir Arčabić and Sever Ivan ()
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Kožić Ivan: Institute for Tourism, Vrhovec 5, 10000 Zagreb, Croatia, Phone: +385-1-3909-666, Fax: +385-1-3909-667
Sever Ivan: thinktourism d.o.o., Radnička cesta 80, 10000 Zagreb, Croatia, Phone: +385-98-402-561

Zagreb International Review of Economics and Business, 2022, vol. 25, issue 1, 95-110

Abstract: For a long time, tourism has been considered a social, economic and environmental phenomenon that provides products and services whose consumption is supposed to surge in periods of economic growth and wane in periods of slowdown, thereby acting procyclical. To examine this hypothesis, we have explored the exact behavior of tourism activity before and after the last big economic crisis – the Great Recession 2008 followed by the European Sovereign Debt Crisis. We have applied a methodology of business cycle analysis to investigate the relationship between the cyclical components of GDP and tourism nights spent by the residents of 23 EU member states in the 1996-2018 period. We report an important structural change in the relationship between tourism and business cycles. The relationship became apparently weaker over time and finally became insignificant after the end of the crisis, suggesting a smooth structural change. Our findings suggest uncertainty as to how tourism activity would restore its usual dynamics following the end of the current COVID-19 pandemic recession.

Keywords: business cycles; tourism cycles; coherence; the Great Recession 2008 (search for similar items in EconPapers)
JEL-codes: E32 Z30 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:zirebs:v:25:y:2022:i:1:p:95-110:n:1006

DOI: 10.2478/zireb-2022-0007

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