A General Equilibrium Assessment of the Impact of a Fall in Tourism Under Alternative Closure Rules: the Case of the Balearic Islands

Abstract

A look at the 1997 input-output table shows the Balearic Islands as a service-oriented economy, highly specialized in the production of services for tourists. The main goal of this article is to evaluate with alternative multisectoral models the impact on the Balearic Islands economy of a 10 percent permanent fall in tourism demand. First, we estimate the impact of the reduction in nonresident consumption using a rather standard input-output model. Then, we estimate its effects using an extended general linear model implemented with a social accounting matrix elaborated by the authors. Finally, we use an applied (computable) general equilibrium model using alternative closure rules to those encountered in other regional studies.