A SVECM Analysis of the Relationship between International Tourism Arrivals, GDP and Trade in Italy

Abstract

This article provides an SVECM investigation of long-run, short-run and contemporaneous relationships across per capita international tourism arrivals ( ar), real GDP ( y), and total international commercial transactions ( tr) for the Italian economy. We find that variables span a bidimensional cointegrating space, which we normalize as long-run relationships between y and ar and between ar and tr. Signs and magnitudes of the estimated elasticities are as expected and compare well with the literature. The causation mechanism shows that none of the variables are weakly exogenous. What we find is that, whereas there appears to be unidirectional long-run causality running from y to tr and from tr to ar, bidirectional causality is detected between y and ar. Structural estimation and a study of the Impulse-Response functions of “meaningful” shocks hitting the economy are used to provide valuable insights for policy and business strategy design.

Modeling and Forecasting of International Tourism Demand in ASEAN Countries

“…Previous studies explained that tourism industry met imports' needs and it enhance exports (Massidda and Mattana, 2012;Santana-Gallego et al, 2010). International tourism can make a lot of business opportunities by export sales and import purchases (Khan et al, 2005).…”

Tourism: the untapped goldmine in the Gold Coast

“…The two variables were found to be cointegrated, with tourism arrivals Granger-causing GDP growth. Evidence of a oneway causality -from tourism to GDP -has also been documented for Italy by Massidda and Mattana (2013) and for Chile, by Brida, Risso, and Bonapace (2009).…”

Tourism price causalities: Case of an Adriatic country

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