International tourism and economic growth in New Zealand

Author: Jaforullah, Mohammad

Date: 2015-04

Publisher: University of Otago

Type: Working or discussion paper

Link to this item using this URL: http://hdl.handle.net/10523/5603

University of Otago

Abstract

This paper examines whether the tourism-led growth hypothesis holds for the New Zealand economy. Using unit root tests, cointegration tests and vector error correction models, and annual data over the period 1972-2012 on international tourism expenditure, real gross domestic product (GDP) and the exchange rate for New Zealand, it finds that the tourism-led growth hypothesis holds for New Zealand. The long-run elasticity of real GDP with respect to international tourism expenditure is estimated to be 0.4, meaning that a 1% growth in tourism will result in a 0.4% growth of the NZ economy. This finding implies that the New Zealand Government’s policy to promote New Zealand as a preferred tourism destination in the key international tourism markets may boost economic growth.

Subjects: Tourism, Economic growth, cointegration, Granger causality, vector error correction model, New Zealand

Citation: ["Jaforullah, M. (2015). International tourism and economic growth in New Zealand (Economics Discussion Papers Series No. 1502). University of Otago. Retrieved from http://hdl.handle.net/10523/5603"]

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