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Is the tourism-economic growth nexus time-varying? Bootstrap rolling-window causality analysis for the top ten tourist destinations

Muhammad Shahbaz (), Román Ferrer, Syed Jawad Hussain Shahzad () and Ilham Haouas

MPRA Paper from University Library of Munich, Germany

Abstract: This paper explores the time-varying causal nexus between tourism development and economic growth for the top ten tourist destinations in the world, namely China, France, Germany, Italy, Mexico, the Russian Federation, Spain, Turkey, the United Kingdom and the United States of America, over the period 1990-2015. To that end, a bootstrap rolling window Granger causality approach based on the modified Granger causality test developed by Toda and Yamamoto (1995) and Dolado and Lütkepohl (1996), is used. A new index for tourism activity which combines via principal component analysis the commonly used tourism indicators is also employed. The results of the bootstrap rolling window causality tests reveal that the causal relations between tourism and economic growth vary substantially over time and across countries in terms of both magnitude and direction. It is shown that the causal linkages tend to be more pronounced for a large group of countries following the global financial crisis of 2008. Additionally, Germany, France and China clearly stand out as the countries with the weakest causal nexus, while the UK, Italy and Mexico emerge as the countries that have the strongest causal links. These results have particularly important implications for policy makers.

Keywords: Tourism; economic growth; time-varying causality; bootstrap; rolling window causality (search for similar items in EconPapers)
JEL-codes: A1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cis and nep-tur
Date: 2017-10-15, Revised 2017-11-04
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