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Since the 1980s, Turkey has given priority to the advancement and expansion of its tourism industry as part of achieving economic growth and development. This study empirically re-examines the possible causal relationships among tourism receipts, real exchange rate and economic growth by using annual data (1964–2006). Johansen multivariate cointegration analysis reveals the existence of a ‘stable’ and significant long-run equilibrium relationship among real GDP, tourism receipts and real exchange rate (RER). Granger causality tests based on the error correction model indicate a unidirectional causality from tourism receipts and RER to real GDP.

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This study empirically examines the stability of the long-run relationship between tourism and economic growth for Puerto Rico using annual data for 1960-2016. Robust results across several model specifications support the existence of a long-run equilibrium relationship between real GDP, real tourism receipts, and real exchange rate. Contrary to many previous studies that either explicitly or implicitly assume the stability of the cointegrated vector, the authors apply formal stability tests developed by Hansen and Johansen to investigate the long-run parameter constancy issue. Tests for long-run parameter stability reveal that the hypothesis of stable long-run parameters could not be rejected. The results indicate that tourism is a stable source of economic growth for Puerto Rico and Granger causality tests based on the error-correction model indicate a unidirectional causality from tourism receipts to real GDP.

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