Tourism-led growth asymmetries in Greece: evidence from quantile regression analysis

Abstract

The paper provides fresh empirical evidence on the tourism-growth relationship for Greece over the period 1977Q1-2020Q2. We find that the long-run relationship between tourism and output is positive and is characterized by a substantially faster adjustment of output after a negative shock than after a positive one. Using asymmetric error-correction model analysis the results show that the short-term adjustment path occurs through the level of output for negative deviations from the long-run equilibrium, thus supporting the tourism-led growth hypothesis. Linear quantile regression (QR) analysis indicates that the impact of tourism remains positive across the output distribution, but the effect is more pronounced at the lower quantiles of output while at the higher quantiles of output it becomes weaker and statistically insignificant. Furthermore, applying asymmetric QR analysis there is evidence that tourism growth exhibits an asymmetric impact on output growth. Our results have important policy implications, since the tourism-led growth hypothesis is a useful policy recommendation, but it should not be considered a panacea.