Gaming industry and economic growth: Evidence from Macau

Abstract

The aim of the study is to examine the causal relationship between gaming industry and economic growth in Macau over period from 1984 to 2015. The study finds the existence of long-run cointegration relationship. But, this study does not find the one- and two-directional causal relationship between GDP and gaming tax revenues. Furthermore, gaming tax revenues have short-run effect on GDP and slightly explain the percentage of variance. In general, Macau government should pay more attention on the development of gaming industry as the largest sector. According to the empirical results, this study suggests that Macau government should well conduct money supply (M2) in terms of currency in circulation to support the economic growth. Furthermore, Macau government should make effective strategies and plans to stimulate economic development using financial funding from banks.