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Re-Testing the Tourism-Led Growth Hypothesis Using Panel Smooth Transition Regression Models

Author

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  • Sheng-Chieh Pan

    (Department of Leisure and Recreation Management, China University of Technology, 530, Sec 3, Jhongshan Road, Hukou Township, Hsinchu County, Taiwan, ROC)

  • Shiao-Yen Liu

    (College of Business, Chung Yuan Christian University, 200 Chung Pei Road, Chung Li, Taiwan 320, ROC)

  • Po-Chin Wu

    (Department of International Business, 200 Chung Pei Road, Chung Li, Taiwan 320, ROC)

Abstract

This paper re-tests the tourism-led growth hypothesis (TLGH) by estimating panel smooth transition regression models using two different transition variables. The panel data set includes the annual data of 15 OECD countries for the period 1995–2010. The empirical results indicate that the relationships between growth and its determinants are non-linear and vary with time and across countries. Although the TLGH remains valid, the tourism elasticities of growth are small and vary inversely with the one-period lagged exchange rate return and proportionally with the two-period lagged inflation rate. There is a trade-off between employing export policies and employing tourism policies to promote economic growth, and the main impetus behind growth in the sample countries is the increase in human capital.

Suggested Citation

  • Sheng-Chieh Pan & Shiao-Yen Liu & Po-Chin Wu, 2014. "Re-Testing the Tourism-Led Growth Hypothesis Using Panel Smooth Transition Regression Models," Tourism Economics, , vol. 20(1), pages 39-50, February.
    • Handle: RePEc:sae:toueco:v:20:y:2014:i:1:p:39-50
    DOI: 10.5367/te.2013.0262
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    References listed on IDEAS

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    1. Mark Crosby & Glenn Otto, 2001. "Growth and the Real Exchange Rate - Evidence from Eleven Countries," Working Papers 082001, Hong Kong Institute for Monetary Research.
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    Cited by:

    1. Wu, Po-Chin & Liu, Shiao-Yen & Zhai, Rui-Xiang, 2018. "Nonlinear impacts of operating risk and demand management policy on banks’ performance: The role of leading indicator," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 40-53.
    2. Andrew Phiri, 2016. "Tourism and Economic Growth in South Africa: Evidence from Linear and Nonlinear Cointegration Frameworks," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 14(1 (Spring), pages 31-53.
    3. Tsai-Yuan Huang & Po-Chin Wu & Shiao-Yen Liu, 2017. "Defense–Growth Causality: Considerations of Regime-Switching and Time- and Country-Varying Effects," Defence and Peace Economics, Taylor & Francis Journals, vol. 28(5), pages 568-584, September.
    4. Dogan, Ergun & Zhang, Xibin, 2023. "A nonparametric panel data model for examining the contribution of tourism to economic growth," Economic Modelling, Elsevier, vol. 128(C).
    5. Wu, Po-Chin & Liu, Shiao-Yen & Hsiao, Juei-Ming & Huang, Tsai-Yuan, 2016. "Nonlinear and time-varying growth-tourism causality," Annals of Tourism Research, Elsevier, vol. 59(C), pages 45-59.

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