Does tourism promote economic growth? A fractionally integrated heterogeneous panel data analysis

Abstract

In this article, we analyse whether tourism promotes economic growth using a general dynamic panel data model that incorporates individual and interactive fixed effects and allows for contemporaneous correlation in model innovations. The empirical study is based on quarterly series of GDP and tourist arrivals for 14 European countries covering the period from 1995 to 2019. Results indicate that the case for a positive long-run relationship between tourism and economic growth is rather weak, being slightly stronger for the period prior to the global economic and financial crisis from 2007 to 2010. When applying panel fractional cointegration techniques, we find evidence in favour of the tourism-led growth hypothesis (TLGH) for the full sample mainly for North European countries. For the pre-crisis period, on the other hand, we find evidence in favour of the TLGH for the relevant tourist destinations Spain and France.

Exploring The Impact of Tourism Development and Governance on Economic Growth of Developing Economies: Evidence from Driscol-Kraay Approach

“…Further Pérez-Rodríguez et al (2022) examined broad dynamic panel data model for the 14 European countries and supported the tourism-led growth hypothesis (TLGH) for the entire sample, primarily for countries in North Europe, when panel fractional cointegration techniques were applied. In addition to this, Su et al (2021) examined that tourism of the economy significantly affected the economic growth of China.…”

Social Media and Influencer Marketing for Promoting Sustainable Tourism Destinations: The Instagram Case

“…For the examination of the hypotheses mentioned previously, a multiple hierarchical analysis using SPSS Statistics was implemented. This type of analysis consists of a valid way to examine and predict the impact of an independent variable on a dependent one [84]. A panel data model for organizing the data of the sample, as also used in Ergemen [81] and Pérez-Rodríguez et al's [84] research, and a regression model described by Pan and Dossu [85] were used to establish the relationship between location-based social media data and the selection of the sustainable tourism destinations [72,84].…”

“…By moving to the examination of the second hypothesis (hypothesis for the moderation effect), the final equation of Yit = α + sitδ + zitβ + eitsitµ + εit (2) was implemented [84].…”

Panel data models in tourism research: Innovative applications and methods

“…Pérez-Rodríguez et al (2022) explores TLGH by applying a fractionally integrated heterogeneous panel data method. The main purpose of this approach is to extend the role of the lagged errors, so that a longer range dependence can be considered.…”