Tourism as a factor of long-run economic growth: An empirical analysis for Chile
Keywords:economic growth; tourism expenditure; Johansen cointegration; Granger causality
This paper empirically investigates the impact of tourism on the long-run economic growth of Chile by using the Johansen analysis to obtain a co-integrated vector among the relevant variables and the Granger Causality test to investigate causality. We use annual data from 1988 to 2008 of the GDP of Chile, the tourism expenditure and the real exchange rate. The Johansen analysis shows that both elasticities of the co-integrated vector are positive and the Granger test shows that causality goes unidirectionally from tourism and real exchange rate to real GDP. Impulse response analysis shows that a positive shock in the tourism expenditure and the real exchange rate first produces negative effects and then a continuous and sustained positive impact.