Estimated Economic Ripple Effects of Closed-Type Tourism Promotion Measures

Abstract

The COVID-19 pandemic caused the most severe drop in GDP growth in Japan. In particular, the tourism industry was severely affected as a result of the sharp decline in the number of travelers. In response, the Japanese government launched “Go To Travel” campaign in July 2020 to stimulate consumption regarding domestic travel. However, the re-emergence of infection outbreaks caused the campaign to be suspended on December 28, 2020. After that, many local governments decided to launch their own region-specific closed-type “Prefectural Citizen Discount” to prop up local tourism. This study aims to estimate the economic ripple effects created by the “Prefectural Citizen Discount.” For this purpose, we chose Hiroshima Prefecture in December 2021 as an example of the location and time period. First, a questionnaire survey was conducted to clarify the use of the “Prefectural Citizen Discount.” Then, the values of its impact on the economy were estimated using an inter-industry relations analysis. Next, the economic ripple effects were estimated stochastically by combining the input–output analysis with a Monte Carlo simulation. This makes it possible to estimate economic ripple effects as confidence intervals rather than as single values. In addition, by changing the assumptions in the Monte Carlo simulation, several scenarios were simulated. Finally, we showed that prefectural residents’ scary feelings toward COVID-19 alter the economic ripple effects, that is the induced production.