Estimating the Output Response to Tourism Spending in the Mediterranean Countries
Marko Senekovič - Faculty of Economics and Business, University of Maribor, Razlagova 14, 2000 Maribor, Slovenia
Jani Bekő - Faculty of Economics and Business, University of Maribor, Razlagova 14, 2000 Maribor, Slovenia
DOI: https://doi.org/10.31410/tmt.2021-2022.133
Marko Senekovič - Faculty of Economics and Business, University of Maribor, Razlagova 14, 2000 Maribor, Slovenia
Jani Bekő - Faculty of Economics and Business, University of Maribor, Razlagova 14, 2000 Maribor, Slovenia
DOI: https://doi.org/10.31410/tmt.2021-2022.133
6th International Thematic Monograph - Modern Management Tools and Economy of Tourism Sector in Present Era, Belgrade, 2021/2022, Published by: Association of Economists and Managers of the Balkans in cooperation with the Faculty of Tourism and Hospitality, Ohrid, North Macedonia; ISSN 2683-5673, ISBN 978-86-80194-49-3; Editors: Vuk Bevanda, associate professor, Faculty of Social Sciences, Belgrade, Serbia; Snežana Štetić, full time professor, The College of Tourism, Belgrade, Serbia, Printed by: SKRIPTA International, Belgrade
Abstract: The aim of this chapter is, first, to assess the impact of changes in tourism spending on economic activity in 16 Mediterranean countries and, second, to examine whether country-specific characteristics affect the size of tourism spending multipliers. Based on aggregate SVAR model estimates, the authors confirmed a statistically significant response of output to the shock in tourism spending in 88% of the analyzed cases at least over the part of the forecast horizon. In 56% of the examined cases, the value of the respective multiplier is above two. The existence of the multiplier mechanism is documented in 13 economies for domestic and foreign tourism spending within a particular forecast horizon. Tourism spending generates stronger GDP growth in countries that record a higher standard of living, have a better state of road and railroad transport infrastructure, and, to some extent, display higher consumer price levels of hotels and restaurants.
Keywords: Tourism Spending Multiplier; Economic activity; Vector Autoregression Model; Determinants
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Aslan, A. (2014). Tourism development and economic growth in the Mediterranean countries: evidence from panel Granger causality tests. Current Issues in Tourism, 17(4), 363-372. http://doi.org/10.1080/13683500.2013.768607
Bacovic, M., Jacimovic, D., & Cerovic Smolovic, J. (2020). Impact of export of travel services on current account balance and growth in Mediterranean countries. Prague Economic Papers, 29(6), 710-728. https://doi.org/10.18267/j.pep.748
Bekő, J., & Boršič, D. (2020). Are the Mediterranean countries with tourism price indices in the purchasing power parity zone? In V. Bevanda & S. Štetić (Ed.), 5th International Thematic Monograph: Modern Management Tools and Economy of Tourism Sector in
Present Era, (pp. 107-130). Association of Economists and Managers of the Balkans. https://doi.org/10.31410/tmt.2020.107
Belke, M., Bolat, S., & Hatemi, A. (2021). The impact of tourism on the economic growth in the Mediterranean countries: evidences from hidden panel cointegration test. Journal of Economics and Administrative Sciences Faculty, 8(1), 399-419. https://doi.org/10.30798/makuiibf.822194
Bilen, M., Yilanci, V., & Eryüzlü, H. (2017). Tourism development and economic growth: a panel Granger causality analysis in the frequency domain. Current Issues in Tourism, 20(1), 27-32. http://doi.org/10.1080/13683500.2015.1073231
Blanchard, O., & Perotti, R. (1999). An empirical characterization of the dynamic effects of changes in government spending and taxes on output. NBER Working Paper No. 7269, National Bureau of Economic Research, Cambridge.
Chou, M. C. (2013). Does tourism development promote economic growth in transition countries? A panel data analysis. Economic Modelling, 33, 226-232. http://dx.doi.org/10.1016/j.econmod.2013.04.024
Deleidi, M., Iafrate, F., & Levrero, E. S. (2020). Public investment fiscal multipliers: An empirical assessment for European countries. Structural Change and Economic Dynamics, 52, 354-365. http://doi.org/10.1016/j.strueco.2019.12.004
Dritsakis, N. (2012). Tourism development and economic growth in seven Mediterranean countries: A panel data approach. Tourism Economics, 18(4), 801-816. http://doi.org/10.5367/te.2012.0140
Gavurova, B., Belas, J., Valaskova, K., Rigelsky, M., & Ivankova, V. (2021). Relations between infrastructure innovations and tourism spending in developed countries: a macroeconomic perspective. Technological and Economic Development of Economy, 27(5), 1072-1094. http://doi.org/10.3846/tede.2021.15361
Ghalia, T., & Fidrmuc, J. (2018). The curse of tourism? Journal of Hospitality & Tourism Research, 42(6), 979-996. http://doi.org/10.1177/1096348015619414
Gherghina, S. C., Onofrei, M., Vintila, G., & Armeanu, D. S. (2018). Empirical evidence from the EU-28 countries on resilient transport infrastructure systems and sustainable economic growth. Sustainability, 10(8), 1-34. http://doi.org/10.3390/su10082900
Ilzetzki, E., Mendoza, E. G., & Végh, C. A. (2013). How big (small?) are fiscal multipliers? Journal of Monetary Economics, 60(2), 239-254 http://doi.org/10.1016/j.jmoneco.2012.10.011
Kasimati, E. (2016). Does tourism contribute significantly to the Greek economy? A multiplier analysis. European Journal of Tourism, Hospitality and Recreation, 7(1), 55-62. http://doi.org/10.1515/ejthr-2016-0006
Koh, W. C. (2017). Fiscal multipliers: New evidence from a large panel of countries. Oxford Economic Papers, 69(3), 569-590. http://doi.org/10.1093/oep/gpw066
Konstantinou, P. T., & Partheniou, A. (2021). The effects of government spending over the business cycle: A disaggregated analysis for OECD and non-OECD countries. The Quarterly Review of Economics and Finance, 80, 809-822. http://doi.org/10.1016/j.qref.2019.09.017
Lejárraga, I., & Walkenhorst, P. (2010). On linkages and leakages: measuring the secondary effects of tourism. Applied Economics Letters, 17(5), 417-421. http://doi.org/10.1080/13504850701765127
Lenz, N. V., Skender, H. P., & Mirković, P. A. (2018). The macroeconomic effects of transport infrastructure on economic growth: the case of Central and Eastern EU member states. Economic Research - Ekonomska Istraživanja, 13(1), 1953-1964. http://doi.org/10.1080/1331677X.2018.1523740
Lütkepohl, H. (2005). New Introduction to Multiple Time Series Analysis. New York, USA: Springer.
Maden, S., Bulgan, G., & Yildrim, S. (2019). The effect of tourism sector on economic growth: an empirical study on Turkey. Journal of Yasar University, 14(55), 215-225.
Mariolis, T., Rodousakis, N., & Soklis, G. (2021). The COVID-19 multiplier effects of tourism on the Greek economy. Tourism Economics. http://doi.org/10.1177/1354816620946547
Massidda, C., & Mattana, P. (2012). A SVECM analysis of the relationship between international tourism arrivals, GDP and trade in Italy. Journal of Travel Research, 52(1), 93-105. http://doi.org/10.1177/0047287512457262
Pascariu, G. C., & Ibănescu, B. C. (2018). Determinants and implications of the tourism multiplier effect in EU economies. Towards a core-periphery pattern? Amfiteatru Economic, 20(12), 982-997. http://doi.org/10.24818/EA/2018/S12/982
Pérez-Montiel, J., Dejuán Asenjo, O., & Manera Erbina, C. (2021). A Harrodian model that fits the tourism-led growth hypothesis for tourism-based economies. European Journal of Tourism Research, 27(2706), 1-17.
Perotti, R. (2002). Estimating the effects of fiscal policy in OECD countries. ECB Working Paper No. 168, European Central Bank, Frankfurt.
Perovic, J., Raicevic, M., & Delibasic, M. (2021). Foreign direct investment, tourism, economic growth and trade: panel vector auto regression (VAR) model. Transformations in Business & Economics, 20(1), 140-153.
Petrović, P., Arsić, M., & Nojković, A. (2021). Increasing public investment can be an effective policy in bad times: Evidence from emerging EU economies. Economic Modelling, 94, 580-597. http://doi.org/10.1016/j.econmod.2020.02.004
Pratt, S. (2015). The economic impact of tourism in SIDS. Annals of Tourism Research, 52, 148-160. http://doi.org/10.1016/j.annals.2015.03.005
Shahzad, S. J. H., Shahbaz, M., Ferrer, R., & Kumar, R. R. (2017). Tourism-led growth hypothesis in the top ten tourist destinations: New evidence using the quantile-on-quantile approach. Tourism Management, 62, 223-232. http://doi.org/10.1016/j.tourman.2016.12.006
Tecel, A., Katircioğlu, S., Taheri, E., & Bekun, F. V. (2020). Causal interactions among tourism, foreign direct investment, domestic credits, and economic growth: evidence from selected Mediterranean countries. Portuguese Economic Journal, 19, 195-212. https://doi.org/10.1007/s10258-020-00181-5
TheGlobalEconomy.com (2021a). Roads quality - country rankings. Retrieved from https://www.theglobaleconomy.com/rankings/roads_quality/
TheGlobalEconomy.com (2021b). Railroad infrastructure quality - country rankings. Retrieved from https://www.theglobaleconomy.com/rankings/railroad_quality/
TheGlobalEconomy.com (2021c). Hotel and restaurant prices - country rankings. Retrieved from https://www.theglobaleconomy.com/rankings/hotel_and_restaurant_prices_wb/
Thirlwall, A. P. (2002). The Nature of Economic Growth. Cheltenham: Edward Elgar Publishing.
Tugcu, C. T. (2014). Tourism and economic growth nexus revisited: a panel causality analysis for the case of the Mediterranean region. Tourism Management, 42, 207-212. http://dx.doi.org/10.1016/j.tourman.2013.12.007
Tuncay, N., & Özcan, C. C. (2020). The effect of Dutch disease in the tourism sector: the case of Mediterranean countries. Tourism and Hospitality Management, 26(1), 97-114. https://doi.org/10.20867/thm.26.1.6
Valdés, B. D. (1999). Economic Growth, Theory, Empirics and Policy. Cheltenham: Edward Elgar Publishing.
World Bank (2021a). World Development Indicators. Retrieved from https://databank.worldbank.org/source/world-development-indicators
World Bank (2021b). TCdata360. Retrieved from https://tcdata360.worldbank.org/
WTTC. (2021). World travel and tourism council. Retrieved from https://wttc.org/
Keywords: Tourism Spending Multiplier; Economic activity; Vector Autoregression Model; Determinants
REFERENCES
Abrigo, M. R. M., & Love, I. (2016). Estimation of panel vector autoregression in Stata: a package of programs. University of Hawaii Working Paper No. 16/2, University of Hawaii, Hawaii.
Alaminos, D., León-Gómez, A., & Sánchez-Serrano, J. R. (2020). A DSGE-VAR analysis for tourism development and sustainable economic growth. Sustainability, 12(9), 3635. https://doi.org/10.3390/su12093635
Aslan, A. (2014). Tourism development and economic growth in the Mediterranean countries: evidence from panel Granger causality tests. Current Issues in Tourism, 17(4), 363-372. http://doi.org/10.1080/13683500.2013.768607
Bacovic, M., Jacimovic, D., & Cerovic Smolovic, J. (2020). Impact of export of travel services on current account balance and growth in Mediterranean countries. Prague Economic Papers, 29(6), 710-728. https://doi.org/10.18267/j.pep.748
Bekő, J., & Boršič, D. (2020). Are the Mediterranean countries with tourism price indices in the purchasing power parity zone? In V. Bevanda & S. Štetić (Ed.), 5th International Thematic Monograph: Modern Management Tools and Economy of Tourism Sector in
Present Era, (pp. 107-130). Association of Economists and Managers of the Balkans. https://doi.org/10.31410/tmt.2020.107
Belke, M., Bolat, S., & Hatemi, A. (2021). The impact of tourism on the economic growth in the Mediterranean countries: evidences from hidden panel cointegration test. Journal of Economics and Administrative Sciences Faculty, 8(1), 399-419. https://doi.org/10.30798/makuiibf.822194
Bilen, M., Yilanci, V., & Eryüzlü, H. (2017). Tourism development and economic growth: a panel Granger causality analysis in the frequency domain. Current Issues in Tourism, 20(1), 27-32. http://doi.org/10.1080/13683500.2015.1073231
Blanchard, O., & Perotti, R. (1999). An empirical characterization of the dynamic effects of changes in government spending and taxes on output. NBER Working Paper No. 7269, National Bureau of Economic Research, Cambridge.
Chou, M. C. (2013). Does tourism development promote economic growth in transition countries? A panel data analysis. Economic Modelling, 33, 226-232. http://dx.doi.org/10.1016/j.econmod.2013.04.024
Deleidi, M., Iafrate, F., & Levrero, E. S. (2020). Public investment fiscal multipliers: An empirical assessment for European countries. Structural Change and Economic Dynamics, 52, 354-365. http://doi.org/10.1016/j.strueco.2019.12.004
Dritsakis, N. (2012). Tourism development and economic growth in seven Mediterranean countries: A panel data approach. Tourism Economics, 18(4), 801-816. http://doi.org/10.5367/te.2012.0140
Gavurova, B., Belas, J., Valaskova, K., Rigelsky, M., & Ivankova, V. (2021). Relations between infrastructure innovations and tourism spending in developed countries: a macroeconomic perspective. Technological and Economic Development of Economy, 27(5), 1072-1094. http://doi.org/10.3846/tede.2021.15361
Ghalia, T., & Fidrmuc, J. (2018). The curse of tourism? Journal of Hospitality & Tourism Research, 42(6), 979-996. http://doi.org/10.1177/1096348015619414
Gherghina, S. C., Onofrei, M., Vintila, G., & Armeanu, D. S. (2018). Empirical evidence from the EU-28 countries on resilient transport infrastructure systems and sustainable economic growth. Sustainability, 10(8), 1-34. http://doi.org/10.3390/su10082900
Ilzetzki, E., Mendoza, E. G., & Végh, C. A. (2013). How big (small?) are fiscal multipliers? Journal of Monetary Economics, 60(2), 239-254 http://doi.org/10.1016/j.jmoneco.2012.10.011
Kasimati, E. (2016). Does tourism contribute significantly to the Greek economy? A multiplier analysis. European Journal of Tourism, Hospitality and Recreation, 7(1), 55-62. http://doi.org/10.1515/ejthr-2016-0006
Koh, W. C. (2017). Fiscal multipliers: New evidence from a large panel of countries. Oxford Economic Papers, 69(3), 569-590. http://doi.org/10.1093/oep/gpw066
Konstantinou, P. T., & Partheniou, A. (2021). The effects of government spending over the business cycle: A disaggregated analysis for OECD and non-OECD countries. The Quarterly Review of Economics and Finance, 80, 809-822. http://doi.org/10.1016/j.qref.2019.09.017
Lejárraga, I., & Walkenhorst, P. (2010). On linkages and leakages: measuring the secondary effects of tourism. Applied Economics Letters, 17(5), 417-421. http://doi.org/10.1080/13504850701765127
Lenz, N. V., Skender, H. P., & Mirković, P. A. (2018). The macroeconomic effects of transport infrastructure on economic growth: the case of Central and Eastern EU member states. Economic Research - Ekonomska Istraživanja, 13(1), 1953-1964. http://doi.org/10.1080/1331677X.2018.1523740
Lütkepohl, H. (2005). New Introduction to Multiple Time Series Analysis. New York, USA: Springer.
Maden, S., Bulgan, G., & Yildrim, S. (2019). The effect of tourism sector on economic growth: an empirical study on Turkey. Journal of Yasar University, 14(55), 215-225.
Mariolis, T., Rodousakis, N., & Soklis, G. (2021). The COVID-19 multiplier effects of tourism on the Greek economy. Tourism Economics. http://doi.org/10.1177/1354816620946547
Massidda, C., & Mattana, P. (2012). A SVECM analysis of the relationship between international tourism arrivals, GDP and trade in Italy. Journal of Travel Research, 52(1), 93-105. http://doi.org/10.1177/0047287512457262
Pascariu, G. C., & Ibănescu, B. C. (2018). Determinants and implications of the tourism multiplier effect in EU economies. Towards a core-periphery pattern? Amfiteatru Economic, 20(12), 982-997. http://doi.org/10.24818/EA/2018/S12/982
Pérez-Montiel, J., Dejuán Asenjo, O., & Manera Erbina, C. (2021). A Harrodian model that fits the tourism-led growth hypothesis for tourism-based economies. European Journal of Tourism Research, 27(2706), 1-17.
Perotti, R. (2002). Estimating the effects of fiscal policy in OECD countries. ECB Working Paper No. 168, European Central Bank, Frankfurt.
Perovic, J., Raicevic, M., & Delibasic, M. (2021). Foreign direct investment, tourism, economic growth and trade: panel vector auto regression (VAR) model. Transformations in Business & Economics, 20(1), 140-153.
Petrović, P., Arsić, M., & Nojković, A. (2021). Increasing public investment can be an effective policy in bad times: Evidence from emerging EU economies. Economic Modelling, 94, 580-597. http://doi.org/10.1016/j.econmod.2020.02.004
Pratt, S. (2015). The economic impact of tourism in SIDS. Annals of Tourism Research, 52, 148-160. http://doi.org/10.1016/j.annals.2015.03.005
Shahzad, S. J. H., Shahbaz, M., Ferrer, R., & Kumar, R. R. (2017). Tourism-led growth hypothesis in the top ten tourist destinations: New evidence using the quantile-on-quantile approach. Tourism Management, 62, 223-232. http://doi.org/10.1016/j.tourman.2016.12.006
Tecel, A., Katircioğlu, S., Taheri, E., & Bekun, F. V. (2020). Causal interactions among tourism, foreign direct investment, domestic credits, and economic growth: evidence from selected Mediterranean countries. Portuguese Economic Journal, 19, 195-212. https://doi.org/10.1007/s10258-020-00181-5
TheGlobalEconomy.com (2021a). Roads quality - country rankings. Retrieved from https://www.theglobaleconomy.com/rankings/roads_quality/
TheGlobalEconomy.com (2021b). Railroad infrastructure quality - country rankings. Retrieved from https://www.theglobaleconomy.com/rankings/railroad_quality/
TheGlobalEconomy.com (2021c). Hotel and restaurant prices - country rankings. Retrieved from https://www.theglobaleconomy.com/rankings/hotel_and_restaurant_prices_wb/
Thirlwall, A. P. (2002). The Nature of Economic Growth. Cheltenham: Edward Elgar Publishing.
Tugcu, C. T. (2014). Tourism and economic growth nexus revisited: a panel causality analysis for the case of the Mediterranean region. Tourism Management, 42, 207-212. http://dx.doi.org/10.1016/j.tourman.2013.12.007
Tuncay, N., & Özcan, C. C. (2020). The effect of Dutch disease in the tourism sector: the case of Mediterranean countries. Tourism and Hospitality Management, 26(1), 97-114. https://doi.org/10.20867/thm.26.1.6
Valdés, B. D. (1999). Economic Growth, Theory, Empirics and Policy. Cheltenham: Edward Elgar Publishing.
World Bank (2021a). World Development Indicators. Retrieved from https://databank.worldbank.org/source/world-development-indicators
World Bank (2021b). TCdata360. Retrieved from https://tcdata360.worldbank.org/
WTTC. (2021). World travel and tourism council. Retrieved from https://wttc.org/
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