Re-Testing the Tourism-Led Growth Hypothesis Using Panel Smooth Transition Regression Models

Sheng-Chieh Pan, Shiao-Yen Liu and Po-Chin Wu
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Sheng-Chieh Pan: Department of Leisure and Recreation Management, China University of Technology, 530, Sec 3, Jhongshan Road, Hukou Township, Hsinchu County, Taiwan, ROC
Shiao-Yen Liu: College of Business, Chung Yuan Christian University, 200 Chung Pei Road, Chung Li, Taiwan 320, ROC
Po-Chin Wu: Department of International Business, 200 Chung Pei Road, Chung Li, Taiwan 320, ROC

Tourism Economics, 2014, vol. 20, issue 1, 39-50

Abstract: This paper re-tests the tourism-led growth hypothesis (TLGH) by estimating panel smooth transition regression models using two different transition variables. The panel data set includes the annual data of 15 OECD countries for the period 1995–2010. The empirical results indicate that the relationships between growth and its determinants are non-linear and vary with time and across countries. Although the TLGH remains valid, the tourism elasticities of growth are small and vary inversely with the one-period lagged exchange rate return and proportionally with the two-period lagged inflation rate. There is a trade-off between employing export policies and employing tourism policies to promote economic growth, and the main impetus behind growth in the sample countries is the increase in human capital.

Keywords: tourism-led growth hypothesis; panel smooth transition regression model; lagged exchange rate; lagged inflation rate (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:20:y:2014:i:1:p:39-50

DOI: 10.5367/te.2013.0262

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