Tourism Expansion and Economic Development: Var/Vecm Analysis and Forecasts for the Case of India

Andreas G Georgantopoulos

Asian Economic and Financial Review, 2013, vol. 3, issue 4, 464-482

Abstract: This study tests for the existence and direction of causality between output growth and tourism expenditure using a trivariate model with real effective exchange rate (REER), analysed as a whole and in sub-categories (i.e. leisure travel and tourism expenditures, LTS and business travel and tourism expenditures, BTS) during the period 1988-2011 for India. For this purpose exhaustive empirical evidence are provided from the application of Phillips-Perron and KPSS unit root tests, Johansen cointegration tests, VAR models with an error-correction term, impulse responses, variance decompositions and forecasts generated from the VAR/VECM models. Results for the aggregated model indicate that all variables return to their long-run equilibrium relationships although this model failed to support the significance of causal links between total tourism expenditure and India’s real output. However, the application of the disaggregated model imply strong bidirectional causal links between growth and LTS in the long-run and unidirectional causal links from LTS and BTS to growth suggesting direct impact of tourism on the Indian real output. Finally, forecasts generated for the period 2012-2016 are promising; total tourism expenditure compared to the previous half-decade will grow at a similar pace and optimistic forecasts are generated for the case of LTS, BTS and GDP.

Keywords: Tourism; Economic growth; Cointegration; Forecasts; India. (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://archive.aessweb.com/index.php/5002/article/view/1011/1493 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:3:y:2013:i:4:p:464-482:id:1011

Access Statistics for this article

More articles in Asian Economic and Financial Review from Asian Economic and Social Society
Bibliographic data for series maintained by Robert Allen ().