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Does Tourism Really Matter for Economic Growth? Evidence from Nepal

Author

Listed:
  • Shoorabeer Paudyal, Ph.D.

    (Tribhuvan University)

Abstract

Tourism seems to be widely recognized as the one among a few sectors in Nepal which can be an engine of economic growth. However, there are few empirical studies about Nepalese tourism. This paper, thus, attempts to examine the impact of t ourism and other related macroeconomic variables on the economic growth of Nepal by deriving tourism income multiplier from the Keynesian macroeconomic model. The three stage least square and seemingly unrelated regressions are the techniques employed for estimating the value of multiplier. The estimated value of multiplier based onregression results over thirty six year period from 1975 to 2010 is estimated at 1.21. In addition, Granger causality tests are used to confirm the direction of the impact of one variable on another variable, which reveals that there exists bi-directional impact in the case of tourism receipts and GDP. In addition, tourism receipts are found to have bi-directional relationship with some other variables such as GNI, exports, private consumption, imports and so on. Thus, tourism multiplier and the Granger causality tests show that tourism is important component for economic growth in Nepal.

Suggested Citation

  • Shoorabeer Paudyal, Ph.D., 2012. "Does Tourism Really Matter for Economic Growth? Evidence from Nepal," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 24(1), pages 48-66, April.
    • Handle: RePEc:nrb:journl:v:24:y:2012:i:1:p:4
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    References listed on IDEAS

    as
    1. S.R. Osmani & B.B. Bajracharya, 2008. "Nepal," Chapters, in: Anis Chowdhury & Wahiduddin Mahmud (ed.), Handbook on the South Asian Economies, chapter 5, Edward Elgar Publishing.
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    Cited by:

    1. Gautam, Bishnu Prasad, 2014. "Economic Dynamics of Tourism in Nepal: A VECM Approach," MPRA Paper 58102, University Library of Munich, Germany.
    2. Nepal, Rabindra & al Irsyad, M. Indra & Nepal, Sanjay Kumar, 2018. "Tourist arrivals, energy consumption and pollutant emissions in a developing economy–implications for sustainable tourism," Working Papers 2018-10, University of Tasmania, Tasmanian School of Business and Economics.

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    More about this item

    Keywords

    Tourism receipts; tourism income multiplier; three stage least square;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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