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Tourism Economics in Saudi Arabia: PP-VAR Approach

Mohammed Ageli ()

MPRA Paper from University Library of Munich, Germany

Abstract: In This paper investigates the nexus relationship between tourism expenditure and Non Oil economic growth in Saudi Arabia over the period 1970-2012. Using Phillips and Perron (PP) unit root test-VAR approach with several techniques including Unit root tests, Johansen’s co-integration test, Granger Causality test and Vector Error Correction Model (VECM). We used time series econometrics techniques to examine the causal relationship between tourism expenditure and economic growth in the Saudi economy. The findings reveal that there is a bilateral causality and positive long-run relationship running from Non Oil-GDP to tourism expenditure. The results obtained from the analyses show that there is a positive relationship between tourism spending and economic growth in Saudi Arabia. The development of tourism sector will thus have a positive impact on the growth of the Saudi economy. Also, the results show that, in Saudi Arabia, the model of tourism expenditure is found to hold for Non Oil-GDP.

Keywords: Tourism Expenditure; PP-VAR Approach; Phillips and Perron (PP) unit root test; Co-integration test; Vector Error Correction Model (VECM); Granger Causality; Economic Growth; Saudi Arabia (search for similar items in EconPapers)
JEL-codes: C32 L83 O53 (search for similar items in EconPapers)
Date: 2013-04-01
New Economics Papers: this item is included in nep-ara, nep-fdg and nep-tur
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Published in Asian Journal of Business and Management 1.1(2013): pp. 21-27

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