International tourism and economic growth in New Zealand

Mohammad Jaforullah ()
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Mohammad Jaforullah: Department of Economics, University of Otago, New Zealand

No 1502, Working Papers from University of Otago, Department of Economics

Abstract: This paper examines whether the tourism-led growth hypothesis holds for the New Zealand economy. Using unit root tests, cointegration tests and vector error correction models, and annual data over the period 1972-2012 on international tourism expenditure, real gross domestic product (GDP) and the exchange rate for New Zealand, it finds that the tourism-led growth hypothesis holds for New Zealand. The long-run elasticity of real GDP with respect to international tourism expenditure is estimated to be 0.4, meaning that a 1% growth in tourism will result in a 0.4% growth of the NZ economy. This finding implies that the New Zealand Government’s policy to promote New Zealand as a preferred tourism destination in the key international tourism markets may boost economic growth.

Keywords: Tourism; Economic growth; Cointegration; Granger causality; Vector error correction model; New Zealand (search for similar items in EconPapers)
JEL-codes: C32 F14 L83 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2015-04, Revised 2015-04
New Economics Papers: this item is included in nep-fdg and nep-tur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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http://www.otago.ac.nz/economics/otago089892.pdf First version, 2015 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:otg:wpaper:1502

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