Eastern European Business and Economics Journal

Heterogeneous Panel Granger Causality between GDP and Tourism in 11 EU members in Central and Southeastern Europe

 

 

Blanka Škrabić Perić, Žana Vidović

 

Peric B.S., Vidovic Z. 2017. Heterogeneous Panel Granger causality between GDP and Tourism in 11 EU members in Central and Southeastern Europe. Eastern European Business and Economics Journal 3(1): 6-27.

 

Full text

 

Abstract:

 

This paper investigates the relationship between tourism development and economic growth for 11 Central and South-Eastern European EU members during the period from 1995 to 2013.  Recent empirical studies are mostly focused on proving the tourism–led growth hypothesis, while the other direction of causation or a bidirectional relationship, is rarely investigated. Considering the possibility of the growth- led tourism hypothesis or a bidirectional relationship, as well as heterogeneity among selected countries, the authors use the heterogeneous panel Granger causality test to explore the real relationship between tourism and economic growth. The results significantly confirm heterogeneity in the relationship between GDP and tourism in the countries examined here. The results indicate bidirectional Granger causality between international tourism receipts and GDP for five countries:  The Czech Republic, Hungary, Poland, Romania and Slovakia. GDP growth Granger causes growth of international tourism receipts in Bulgaria and Croatia. For Estonia, Lithuania, Latvia and Slovenia, a causal relationship is not confirmed in any direction.

 

Keywords:

Tourism development, GDP, heterogeneous panel Granger causality, LSDV corrected estimator

 

JEL classification:

C23, P2, 01, L83

 

Language:

English

 

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