Tourism, Dutch Disease and Welfare in an Open Dynamic Economy

Chi-Chur Chao, Bharat Hazari, Jean-Pierre Laffargue (), Pasquale Sgro () and Eden Yu
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Jean-Pierre Laffargue: Développement et mondialisation - CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This paper examines the effects of an expansion in tourism on capital accumulation, sectoral output and resident welfare in an open economy with an externality in the traded good sector. An expansion of tourism increases the relative price of the nontraded good, improves the tertiary terms of trade and hence yields a gain in revenue. However, this increase in the relative price of nontraded goods results in a lowering of the demand for capital used in the traded sector. The subsequent de-industrialization in the traded good sector may lower resident welfare. This result is supported by numerical simulations.

Keywords: Tourism; Capital accumulation (search for similar items in EconPapers)
Date: 2006
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Published in Japanese Economic Review, 2006, 57 (4), pp.501-515. ⟨10.1111/j.1468-5876.2006.00400.x⟩

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Related works:
Journal Article: TOURISM, DUTCH DISEASE AND WELFARE IN AN OPEN DYNAMIC ECONOMY* (2006)
Working Paper: Tourism, Dutch Disease and Welfare in an Open Dynamic Economy (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00645346

DOI: 10.1111/j.1468-5876.2006.00400.x

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