Explaining High Economic Growth in Small Tourism Countries with a Dynamic General Equilibrium Model

Álvarez‐Albelo, Carmen D.; Martín, Raúl Hernández

doi:10.2139/ssrn.1850423

Cited by 5 publications

(1 citation statement)

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“…They found that a tourism boom could increase employment but also decrease capital accumulation and lead to de-industrialisation. Álvarez-Albelo and Hernández-Martín (2007) used data from the Organization for Economic Co-operation and Development (OECD) and small tourism countries to represent capital and tourism export countries, respectively. They found that tourism could help small countries to achieve sustained economic growth.…”

Section: Literature Reviewmentioning

confidence: 99%

Modelling productivity shocks and economic growth using the Bayesian dynamic stochastic general equilibrium approach

Liu

Song

Blake

2018

IJCHM

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Purpose Most existing studies on the impact of tourism on economic growth adopt an econometric approach that is insufficient to confirm that tourism actually leads to economic growth. Moreover, it cannot explain the causalities of different variables. Taking Mauritius as an example, this study aims to use the dynamic stochastic general equilibrium approach to investigate the contribution of tourism to economic growth when there is a productivity shock in the tourism sector. Design/methodology/approach A two-sector, small, open economy is modelled under the dynamic stochastic general equilibrium framework. The model is estimated using the Bayesian method based on real tourism and macroeconomic data from Mauritius for the period from 1999 to 2014. The impulse response functions are used to simulate the contribution of tourism to economic growth when there is a productivity shock in the tourism sector. Findings The simulation results show that the Mauritian gross domestic product (GDP) would increase by 0.09 per cent if the productivity of tourism is improved by 1 per cent, indicating that tourism could lead to economic growth. Considering the average annual growth rate of the Mauritian GDP, the contribution of tourism to its economic growth is significant. Furthermore, the effects of tourism on economic growth are moderated by price elasticities in international tourism demand. Originality/value This is the first study that estimates the dynamic stochastic general equilibrium model using the Bayesian method in tourism economic field. By correcting the prior information with real tourism and macroeconomic data, the estimation and simulation results are more robust compared with the calibration method, which has been used frequently in tourism studies.

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Section: Literature Reviewmentioning

confidence: 99%

Modelling productivity shocks and economic growth using the Bayesian dynamic stochastic general equilibrium approach

Liu

Song

Blake

2018

IJCHM

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Price Level Convergence, Purchasing Power Parity and Multiple Structural Breaks: An Application to US Cities

Basher

Carrion‐i‐Silvestre

2008

SSRN Journal

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This article provides a fresh methodological and empirical approach for assessing price level convergence and its relation to purchasing power parity (PPP) using annual price data for seventeen US cities. We suggest a new procedure that can handle a wide range of PPP concepts in the presence of multiple structural breaks using all possible pairs of real exchange rates. To deal with cross-sectional dependence, we use both cross-sectional demeaned data and a parametric bootstrap approach. In general, we …nd more evidence for stationarity when the parity restriction is not imposed, while imposing parity restriction provides leads toward the rejection of the panel stationarity. Our results can be embedded on the view of the Balassa-Samuelson approach, but where the slope of the time trend is allowed to change in the long-run. The median half-life point estimate are found to be lower than the consensus view regardless of the parity restriction.

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Barriers to Innovation and Public Policy in Catalonia

2007

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ABSTRACT:The present paper analyses the link between firms' decisions to innovate and the barriers that prevent them from being innovative. The aim is twofold. First, it analyses three groups of barriers to innovation: the cost of innovation projects, lack of knowledge and market conditions. Second, it presents the main steps taken by Catalan Government to promote the creation of new firms and to reduce barriers to innovation. The data set used is based on the 2004 official innovation survey of Catalonia which was taken from the Spanish CIS-4 sample. This sample includes individual information on 2,954 Catalan firms in manufacturing industries and knowledge-intensive services (KIS). The empirical analysis reveals pronounced differences regarding a firm's propensity to innovate and its perception of barriers. Moreover, the results show that cost and knowledge barriers seem to be the most important and that there are substantial sectoral differences in the way that firms react to barriers. The results of this paper have important implications for the design of future public policy to promote entrepreneurship and innovation together.Keywords: Obstacles to innovation, industrial policy, innovation system. JEL Codes: O31, O38, D21. RESUMEN:En este trabajo se analiza la relación entre las decisiones de innovación de las empresas y las barreras que les impiden ser innovadoras. Los objetivos son dos. En primer lugar, se analizan tres grupos de barreras a la innovación: el coste de los proyectos de innovación, las carencias de conocimiento y las condiciones de mercado. En segundo lugar, se presentan las acciones principales del Gobierno catalán para promocionar la creación de nuevas empresas y reducir las barreras a la innovación. La base de datos utilizada es la explotación para Cataluña de la Encuesta de Innovación Tecnológica de 2004 de España que forma parte de la CIS-4. La base de datos incluye información individual de 2.594 empresas catalanas de la industria manufacturera y de los servicios intensivos en conocimiento. El análisis aplicado revela la existencia de diferencias significativas en la propensión a innovar de las empresas y su percepción de las barreras. Además, los resultados muestran que las barreras de coste y de conocimiento parecen ser las más importantes y que existen diferencias sectoriales sustanciales en el modo en que las empresas reaccionan a las barreras. Los resultados de este trabajo tienen implicaciones importantes para el diseño de las políticas públicas para la promoción conjunta de la iniciativa emprendedora y la innovación.

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Explaining High Economic Growth in Small Tourism Countries with a Dynamic General Equilibrium Model

Cited by 5 publications

References 15 publications

Modelling productivity shocks and economic growth using the Bayesian dynamic stochastic general equilibrium approach

Modelling productivity shocks and economic growth using the Bayesian dynamic stochastic general equilibrium approach

Price Level Convergence, Purchasing Power Parity and Multiple Structural Breaks: An Application to US Cities

Barriers to Innovation and Public Policy in Catalonia

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