Tourism's Impact on Long-Run Mexican Economic Growth

Economics Bulletin, Vol. 23, No. 21, pp. 1-8, 2008

9 Pages Posted: 18 Dec 2007 Last revised: 6 Mar 2018

See all articles by Edgar Javier Sanchez Carrera

Edgar Javier Sanchez Carrera

University of Siena - Department of Economics

Juan Gabriel Brida

Universidad de la República

Wiston Adrián Risso

University of Siena - Department of Economics

Date Written: September 2007

Abstract

Tourism is one of the most important factors in the productivity of the Mexican economy with significant multiplier effects on economic activity. This paper investigates possible causal relationships between tourism expenditure, real exchange rate and economic growth by using quarterly data. Johansen co-integration analysis shows the existence of one cointegrated vector among real GDP, tourism expenditure, and real exchange rate where the corresponding elasticities are positive. The tourism-led growth hypothesis is confirmed through cointegration and causality testing. Expenditure is weakly exogenous to real GDP producing a more than proportional effect in growth (it means real GDP increases 60% more when expenditure in tourism is increased). Short-run Granger causality shows that causality goes from expenditure to GDP, and there is a bidirectional short-run causality between real exchange rate and real GDP. Impulse response analysis shows that a shock in expenditure produce a continuous positive effect on growth while a shock in real exchange rate produces first a negative effect and then a positive one.

Keywords: economic growth, earnings by tourism, Johansen cointegration, Granger causality

JEL Classification: O10, L83, C22

Suggested Citation

Sanchez Carrera, Edgar Javier and Brida, Juan Gabriel and Risso, Wiston Adrián, Tourism's Impact on Long-Run Mexican Economic Growth (September 2007). Economics Bulletin, Vol. 23, No. 21, pp. 1-8, 2008, Available at SSRN: https://ssrn.com/abstract=1076225 or http://dx.doi.org/10.2139/ssrn.1076225

Edgar Javier Sanchez Carrera (Contact Author)

University of Siena - Department of Economics ( email )

Piazza S. Francesco, 7
Siena, I-53100
Italy

Juan Gabriel Brida

Universidad de la República ( email )

Av. 18 de Julio
Montevideo, 1968
Uruguay

Wiston Adrián Risso

University of Siena - Department of Economics ( email )

Piazza S. Francesco, 7
Siena, I-53100
Italy
00390577235058 (Phone)

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