Welfare effects of tourism-driven Dutch disease: The roles of international borrowings and factor intensity

Chen, Ping-Ho; Lai, Ching‐chong; Chu, Hsun

doi:10.1016/j.iref.2016.02.004

Cited by 12 publications

(8 citation statements)

References 28 publications

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“…The capital depreciation rate in the tourism sector is assumed to be higher than that in the manufacturing sector to account for the intensive utilization of facilities in tourism and hospitality-related activities during peak seasons (Turner & Hesford, 2018). This difference implies the tourism sector is more labor intensive than manufacturing sector (higher labor share in tourism production function), which is consistent with the general empirical fact (Chen et al, 2016). Therefore, we set δ T = 0 . 2 , and δ M = 0 . 1 , wheares the equilibria imply α T = 0 . 66 , and α M = 0 . 55 > .…”

Section: Resultssupporting

confidence: 88%

Does Tourism Contribute to Real Estate Boom? A DSGE Modeling in Small Open Economy

Zhang

Yang

2020

Journal of Hospitality & Tourism Research

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This article aims to investigate the relationship between inbound tourism and housing market along with the recent boom in Icelandic real estate sector, in which both house and rental prices have been rising dramatically. To this end, we construct a small open economy dynamic stochastic general equilibrium model enclosing a tourism sector and a housing market with owner-occupied and rental sections. The simulation results unveil a transmission channel that indicates the higher inbound tourism demand raises both house prices and rental prices. Variance decomposition and historical decomposition show that both inbound tourism demand shock and manufacturing technology shock are the key driving forces of the fluctuations of Icelandic house prices, consumption, and investment, whereas housing preference shock plays the most important role in determining the volatility of rental prices. The policy implications indicate that any shocks to tourism could easily spillover to housing market dynamics and aggregate fluctuations.

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Section: Resultssupporting

confidence: 88%

Does Tourism Contribute to Real Estate Boom? A DSGE Modeling in Small Open Economy

Zhang

Yang

2020

Journal of Hospitality & Tourism Research

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“…Chang et al (2011) further developed a dynamic optimizing macroeconomic model with touristic congestion externalities and found deindustrialization in the manufacturing sector led by tourism expansion. In another study, Chen et al (2016) considered a general two-sector model in which a tourism good also needs capital to be produced and indicated that the Dutch disease occurs after tourism expansion but welfare will be affected only when there is an imperfect international financial market in which the destination country cannot borrow freely.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In line with previous literature on tourism (e.g. Chang et al, 2011;Chao et al, 2006;Chen et al, 2016), we assume that besides the domestic consumers, there are also foreign tourists in the economy. By assumption, they do not work or invest but only demand the tourism goods and pay consumption taxes to the government of the destination country.…”

Section: Foreign Touristsmentioning

confidence: 99%

“…The setting of the production environment largely follows the literature (Chen et al, 2016). Both the tourism and manufacturing sectors are assumed to be perfectly competitive for simplicity.…”

Section: Firmsmentioning

confidence: 99%

“…Tourism sector. Given the empirical results and the common specification in the tourism literature (Chen et al, 2016), we assume that the tourism firms leverage labour l T t and capital k T t as inputs to produce the tourism good y T t . Capital can be thought of as including endowed tourism resources (e.g.…”

Section: Firmsmentioning

confidence: 99%

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Prescribing for the tourism-induced Dutch disease: A DSGE analysis of subsidy policies

Zhang

Yang

2018

Tourism Economics

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Tourism-induced Dutch disease can be particularly detrimental to small open economies due to deindustrialization and potential long-term welfare loss. This study adopts an innovative macroeconomic modelling tool, dynamic stochastic general equilibrium modelling, to investigate the effects of external inbound tourism booms on the national economic account of a small open economy. The results confirm the existence of Dutch disease, but tourism booms also bring welfare gains to the destination country. We further model the effects of two strategies to mitigate the Dutch disease by assuming that the government can tax the tourism sector and subsidize the manufacturing sector in two ways: production subsidies and investment subsidies. The results show that the effectiveness of production subsidies is very modest, while investment subsidies can almost completely overturn the Dutch disease. In terms of welfare, investment subsidies lower welfare gains in the very short term, but the positive effects persist over the longer term, which is different from the production subsidy case. Last, practical implications are provided.

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Balancing efficiency and fairness: The role of tourism development in economic growth and urban–rural income gap

Gan,

Voda,

Wang

2024

Sustainable Development

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Social fairness and economic recovery stimulation constitute crucial challenges in countries all around the world, and tourism development has enormous potential for balancing efficiency and fairness. Based on the panel data at city level in Yangtze River Delta Region, China, this study uncovered the role that tourism development plays in economic growth and urban–rural income gap by adopting the dynamic SYS‐GMM model. In addition, the moderating effect model was employed to concentrate on the moderating role of urbanization on the relationship between tourism development and economic growth as well as urban–rural income gap. The main conclusions are as follows. First, tourism development does not only promote economic growth, but it also narrows the urban–rural income gap. Second, when it comes to the dynamic effect generated by tourism development, the economic growth‐promotion effect is stronger than the urban–rural income gap‐inhibiting effect. Third, urbanization can enhance the impact of tourism development on economic growth and the reduction of urban–rural income gap.

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Welfare effects of tourism-driven Dutch disease: The roles of international borrowings and factor intensity

Cited by 12 publications

References 28 publications

Does Tourism Contribute to Real Estate Boom? A DSGE Modeling in Small Open Economy

Does Tourism Contribute to Real Estate Boom? A DSGE Modeling in Small Open Economy

Prescribing for the tourism-induced Dutch disease: A DSGE analysis of subsidy policies

Balancing efficiency and fairness: The role of tourism development in economic growth and urban–rural income gap

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