The Cointegration and Causality Tests for Tourism and Trade in Malaysia

Abstract

<p class="MsoNormal" style="margin: 0cm 0cm 4pt; line-height: 12pt; mso-line-height-rule: exactly; mso-pagination: widow-orphan;"><span style="font-size: 10pt; mso-font-kerning: 0pt; mso-fareast-language: EN-US;" lang="EN-US"><span style="font-family: Times New Roman;">This paper examines the relationship between tourism and trade that might have evolved in the development of Malaysian economy by using cointegration and causality tests. All analyses have been conducted with quarterly data of international tourism receipts, exports, imports and total trade of Malaysia, over the period of 1995:1 through 2006:4. The results of the unit root tests indicate that the data are stationary in first-difference and not in level. The results of the JJ co integration test however, show that all the series are not cointegrated in the long run, hence, long-run equilibrium did not exist between all the series. Using Granger-causality tests the study found that there is one-way causal effect (unidirectional causality) running from exports to international tourism receipts at 5% significance level. The causality test also shows a one-way causal effect running from imports to international tourist receipts at 5% significance level and total trade to international tourism receipts at 10% significance level. This leads to a conclusion that increase in total trade, exports and imports will cause growth in the tourism sector, which means that most of tourist arrivals are related to business tourism. Therefore, to increase and sustain in the growth of tourism sector, future economic policy should focus more on tourism and trade related, in order to generate more foreign exchange earning to Malaysia.</span></span></p

Economic Growth, Tourism and Selected Macroeconomic Variables: A Triangular Causal Relationship in Malaysia

“…This is consistent with the findings from Kadir and Jusoff (2010). The interactions of exports and tourism receipts then lead to an enhancement of economic growth.…”

Tourism and economic growth in Asia: A bootstrap multivariate panel Granger causality

“…The researchers find that there is a reciprocal relationship between tourism and economic growth. The following destinations include Australia (Corrie, Stoeckl, & Chaiechi, 2013), Malaysia (Kadir & Jusoff, 2010;Lean & Tang, 2010;Othman et al, 2012;Tang, 2013), Pakistan (Khalil, Mehmood, & Waliullah, 2007), Vietnam (Trang & Duc, 2013;Trang, Duc, & Dung, 2014), China (Wang & Xia, 2013), Malta (Katircioglu, 2009), Austria (Othman et al, 2012), Singapore (Othman et al, 2012), Taiwan and South Korea (Chen & Chiou-Wei, 2009;Kim et al, 2006;Lee & Chien, 2008), Greece, and Mauritius (Dritsakis, 2004;Durbarry, 2004). However, the neutrality hypothesis implies that there are no spillover effects between tourism and economic development.…”

The role of inbound tourist flows in promoting exports

“…Using Granger causality, they find one‐way causality from holiday travel from Japan to exports from Australia to Japan. Kadir and Jusoff () find a causal link going from exports to international tourism receipts but not vice versa for Malaysia. They however find a causal link running from imports to international tourism receipts.…”