Tourism expenditures and crisis transmission: A general equilibrium GVAR analysis with network theory

Abstract

According to the World Tourism Organization, during the last decades, tourism has become one of the largest and most dynamic economic industries in the world. In this work, we employ a Network General Equilibrium GVAR model to analyze the impact of tourism expenditures on GDP and our approach allows for the existence of dominant economies in the system. The model is estimated simultaneously as a system of equations for a large panel of world economies and the results show that the less developed economies are quite vulnerable to changes in the tourism expenditures of the dominant economies. Meanwhile, USA is found to be largely unaffected by shocks in the tourism expenditures of the less developed economies.

Determinant Factors of Tourist Expenses

“…While macroeconomic approaches provide global understanding of tourist expenditure patterns (Jang and Ham 2009; Wu, Zhang, and Fujiwara 2013; Lin, Mao, and Song 2015; Serra, Correia, and Rodrigues 2015; Konstantakis, Soklis, and Michaelides 2017), these aggregated expense analyses do not fully consider product-specific issues (Laesser and Crouch 2006). Moreover, the aggregation of macrodata averages out individual idiosyncrasies, and thus provides less valuable information to tourism marketers (Y.…”

Modelling sectoral spillovers in the USA (1992–2015)

“…The present work builds on the prominent works by Acemoglu et al (2012), Bailey et al (2016), Pesaran and Yang (2016), Tsionas et al (2016) and Konstantakis et al (2017). More specifically, in this work we use the network system structure proposed by Acemoglou et al (2012) in order to model the interdependencies between the US sectoral economy, using a network general equilibrium framework.…”

“…Finally, based on the selection of dominant entities introduced in Tsionas et al (2016), we provide a robustness analysis for the dominance characterization of each sector in the network, without ignoring the estimation results of the general equilibrium equation proposed in Konstantakis et al (2017) that characterizes the network. The empirical work undertaken in this paper complements the work of Holly and Petrella (2012) who examine the importance of demand factor linkages in the transmission of sectoral and aggregate shocks, using sectoral structural VARs for the identification of technological shocks.…”

“…Furthermore, Tsionas et al (2016) and Cuaresma et al (2016) were the first papers in the literature that extended GVAR modelling, using Bayesian inference. Lastly, Konstantakis et al (2017) is probably the first article in the literature to incorporate the GVAR in a network general equilibrium framework.…”

“…In comparison to previous contributions, the present work advances the literature in several ways: first, we model by means of a network approach, which is based on a general equilibrium framework developed by Konstantakis et al (2017), the linkages between the US sectors while treating the sector of information, technology, communications and finance as dominant, as dictated by its degree of pervasiveness in the network structure; second, the paper offers a robustness analysis regarding both the existence and the identification of dominant sectors (nodes) in the US economy, using the relevant methodologies introduced in Tsionas et al (2016); third, the paper studies a wide period, i.e. 1992–2015, fully capturing the recent global recession, while acknowledging the impact of global crisis through the introduction of the relevant exogenous dummy variables; lastly and most importantly, it is the first study to apply the GVAR approach in a network general equilibrium framework at the sectoral level .…”