Tourism Revenue Nexus Economic Growth: A Multivariate Dynamic Cointegration and Causality Analyses

Articles in Press

Document Type : Research Paper

Author

Department of Accounting and Information Systems, Faculty of Business Studies, University of Dhaka, Dhaka, Bangladesh

10.22059/ier.2024.373455.1007958

Abstract

Due to the COVID-19 pandemic and political unrest, a crisis is going on in the tourism sector of Bangladesh. Therefore, it is essential, to reform policies to recover this sector from this critical situation. Thus, in this study an attempt has been made to investigate a multivariate dynamic cointegration and causality relationships between economic growth and tourism earnings (TR), domestic credit (DC), broad money(M2), and trade openness (TOPN), using modern econometric techniques based on the time series data from 1974 to 2020. From the estimated elasticities it is found that a 100% increase in tourism revenue and trade openness leads to an increase, in economic growth by 2.17%, and 3.09%, and, a 100% increase in domestic credit and broad money leads to a decrease in economic growth by 5.48%, and 0.02% respectively in the long-run in which the effects of TR, DC, and TOPN are statistically significant. From the estimated results of the error correction model, it can be said that when the economic growth is above or below its equilibrium level it will adjust by 80.29% within the first year which is statistically significant. Thus, the speed of adjustment is very high in case of any shock to the economic growth in Bangladesh.

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 02 October 2024

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