Is Tourism a Key Factor for Economic Growth? Fresh Evidence from South Europe Using Panel Cointegration and PVAR Analyses

Ioannis Kostakis

World Journal of Applied Economics, 2020, vol. 6, issue 2, 123-138

Abstract: This paper brings fresh empirical evidence on the relationship between tourism and economic growth for five South European countries over the period 2000Q1-2018Q4 within a multivariate framework. PVAR and panel cointegration analyses are employed to infer the causal relationship between tourism and economic growth. Heterogeneous panel cointegration test reveals a long-run relationship between real GDP, labour force, gross fixed capital formation and tourism. Granger causality validates the bidirectional and unidirectional causal relationship between tourism, labour and economic growth and physical capital and economic growth, respectively. Simultaneously, impulse-response functions of PVAR model highlight the fact that short-run innovations might have a smaller impact on economic growth against a permanent long-run augmentation of these variables. Our findings might leave ample room for government policies to stimulate strategies for higher economic growth.

Keywords: Tourism; Economic growth; PVAR model; Panel impulse response functions; Panel cointegration (search for similar items in EconPapers)
JEL-codes: C23 L83 Z32 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ana:journl:v:6:y:2020:i:2:p:123-138

DOI: 10.22440/wjae.6.2.2

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