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Purpose – The purpose of this paper is to study the direction of the causality between tourism development and economic growth in Lebanon between 1995 and 2013, after taking into consideration terrorist incidents and their intensities. These are considered as exogenous shocks that affect tourism development and economic growth instantaneously and with a lag. Design/methodology/approach – To reach the objectives, the authors estimate a vector auto regressive model with exogenous variables, applying a series of unit root tests with and without structural breaks and the Granger causality test. Findings – The findings suggest a positive unidirectional causality running from tourism development to economic growth in the short run. Thus, the authors find evidence for the tourism-led growth hypothesis (TLGH) in Lebanon despite the exposure of the country to frequent terrorist incidents. The impulse response functions reveal that tourism development (economic growth) responds positively to a positive shock to economic growth (tourism development). Practical implications – The findings call for Lebanese policy makers aiming at promoting growth to design policies that encourage tourism, such as implementing tourism marketing policies and building the needed tourism infrastructure. Such policies will have positive but transitory effects on economic growth. The findings may also be useful for regional representatives of intergovernmental organizations and the offices of statistics of United Nations World Tourism Organization and the World Bank to better understand the tourism industry in Lebanon and similar countries suffering from instabilities. Originality/value – This paper contributes to the existing literature in three points: despite the importance of the tourism industry to the Lebanese economy, this topic did not receive careful attention in the literature; it takes into consideration the presence of structural breaks and possible nonlinearities in the number of tourist arrivals; and it investigates the TLGH after accounting for instability in the country.

This paper uses a seemingly unrelated regression model (SUR) to test the individual effects of domestic and transnational terrorism on tourism demand to Lebanon, Turkey and Israel over the period 1995–2007. Tourism demand is measured by the logarithm of the number of arrivals to each country. Moreover, this paper tests whether tourism depends on the magnitude of the terrorist attacks by disaggregating terrorism into three levels of intensity – low, medium and high. The results show significant own and spillover effects for domestic and transnational terrorism on tourism demand to each of the three selected countries. In addition, the results show that the effect of terrorism on tourism depends on the intensities of the terrorist attacks.

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This article investigates the impact of terrorism on bilateral tourism flows within the Organization for Economic Co-operation and Development countries. It also examines the moderation effect of immigration in the destination country on the terrorism–tourism relationship. The results obtained from the estimated gravity models show that after reaching a certain threshold, terrorism negatively impacts tourist arrivals. This relation seems to be moderated by the share of immigrants in the country of destination: when the share of immigrants in a country is relatively high, the positive impact of immigration on tourist arrivals would counterbalance the adverse impact of terrorism on tourist arrivals.

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In this article we investigate the link between fluctuations in tourist arrivals (total, Arabs, Europeans) to Lebanon and terrorism in Lebanon on one hand, and the Syrian civil war on the other hand. This is done by estimating a set of models from the GARCH(1,1) family. Hence, in this article we attempt to model the conditional mean and conditional variance of the logarithm of monthly tourist arrivals to Lebanon between January 1995 and December 2014. The results reveal a significant negative marginal effect for terrorism on tourism demand. Moreover, terrorism is found to have a negative impact on the volatility of total international arrivals and Arab arrivals, but a positive impact on the volatility of European arrivals. Hence, terrorism reduces fluctuations in tourist arrivals in the first two cases, but increases fluctuations in the third case. However, terrorism has a transitory effect on the Lebanese tourism sector while the Syrian civil war has a permanent effect. In fact, during the Syrian civil war the volatility of the Lebanese tourism demand decreased.