Abstract
In this paper, we examine the impact of destination risk and currency valuation on the U.S. tourism-growth nexus using the recently developed nonlinear autoregressive distributed lag cointegration technique. Tourism development is proxied by tourist arrivals, while growth is measured by real GDP. Empirical results show evidence of long-run asymmetric bidirectional causality. Positive shocks in tourism development directly impact growth, while negative shocks in GDP have a negative causal effect on tourism. This latter finding, which supports the growth-led tourism hypothesis, suggests that in the long run, tourism tends to improve following periods of economic weakness, perhaps due to the dollar’s weakness at such times. However, we have evidence only of unidirectional causality running from GDP to tourism in the short run. An important implication of these findings is the need to promote inbound tourism, especially when weakness in the U.S. economy is accompanied by a decline in the value of the dollar.
Highlights
The Mediating Effects of ImpliedThe travel and tourism industry is one of the largest economic sectors globally
Examples include Brida et al (2015) for Latin American countries, Kibara et al (2012) for Kenya, and Manzoor et al (2019) for Pakistan. These studies provide a profound insight into the direct linkages between tourism and economic growth, using as a backdrop the growing trend in global tourism documented by the United Nations World Tourism Organization (UNWTO)
The prime purpose of this study is to examine whether causal linkages exist between tourism development and economic growth in the United States
Summary
The travel and tourism industry is one of the largest economic sectors globally. It employs more individuals than any other economic sector. The literature is replete with studies about the positive impact of tourism, especially in developing nations. Examples include Brida et al (2015) for Latin American countries, Kibara et al (2012) for Kenya, and Manzoor et al (2019) for Pakistan. These studies provide a profound insight into the direct linkages between tourism and economic growth, using as a backdrop the growing trend in global tourism documented by the United Nations World Tourism Organization (UNWTO)
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