This paper empirically examines the impact of tourism on the long-run economic growth of Greece by using causality analysis of real gross domestic product, real effective exchange rate and international tourism earnings. A Multivariate Auto Regressive (VAR) model is applied for the period 1960:I-2000:IV. The results of co-integration analysis suggest that there is one co-integrated vector among real gross domestic product, real effective exchange rate and international tourism earnings. Granger causality tests based on Error Correction Models (ECMs), have indicated that there is a ‘strong Granger causal’ relationship between international tourism earnings and economic growth, a ‘strong causal’ relationship between real exchange rate and economic growth, and simply ‘causal’ relationships between economic growth and international tourism earnings and between real exchange rate and international tourism earnings.
AkaikeH. (1974), ‘A new look at the statistical model identification’, IEEE Transactions on Automatic Control, AC-19, pp 716–723.
2.
BalaguerJ.Cantavella-JordaM. (2002), ‘Tourism as a long-run economic growth factor: The Spanish case’, Applied Economics, Vol 34, pp 877–884.
3.
BhagwatiJ.SrinivasanT. (1979), ‘Trade policy and development’, in DornbunschR.FrenkelJ., eds, International Economic Policy: Theory and Evidence, Johns Hopkins University Press, Baltimore, MD, pp 1–35.
4.
CooleyT. F.LeRoyS. F. (1985), ‘A theoretical macroeconomics: A critique’, Journal of Monetary Economics, Vol 16, pp 283–308.
5.
DickeyD.A.FullerW.A. (1979), ‘Distribution of the estimators for autoregressive time series with a unit root’, Journal of the American Statistical Association, Vol 74, pp 427–431.
6.
DickeyD.A.FullerW.A. (1981), ‘Likelihood ratio statistics for autoregressive time series with a unit root’, Econometrica, Vol 49, pp 1057–1072.
7.
DritsakisN.AthanasiadisS. (2000), ‘An econometric model of tourist demand: The case of Greece’, Journal of Hospitality & Leisure Marketing, Vol 2, pp 39–49.
8.
EngleR. F.GrangerC. W. J. (1987), ‘Cointegration and error correction: Representation, estimation and testing’, Econometrica, Vol 55, pp 251–276.
9.
EngleR.F.YooB.S. (1987), ‘Forecasting and testing in cointegrated systems’, Journal of Econometrics, Vol 35, pp 143–159.
10.
GrangerC. (1988), ‘Some recent developments in a concept of causality’, Journal of Econometrics, Vol 39, pp 199–211.
11.
HazariB.R.KaurC. (1995), ‘Tourism and welfare in the presence of pure monopoly in the non-traded goods sector’, International Review of Economics and Finance, Vol 4, pp 171–177.
12.
HazariB.R.NgA. (1993), ‘An analysis of tourists’ consumption of non-traded goods and services on the welfare of the domestic consumers', International Review of Economics and Finance, Vol 2, pp 3–58.
13.
HazariB.R.SgroP.M. (1995), ‘Tourism and growth in a dynamic model of trade’, The Journal of International Trade and Economic Development, Vol 4, pp 253–256.
14.
HelpmanE.KrugmanP. (1985), Market Structure and Foreign Trade, MIT Press, Cambridge.
15.
JohansenS. (1988), ‘Statistical analysis of cointegration vectors’, Journal of Economic Dynamics and Control, Vol 12, pp 231–254.
16.
JohansenS.JuseliousK. (1990), ‘Maximum likelihood estimation and inference on cointegration with applications to the demand for the money’, Oxford Bulletin of Economics and Statistics, Vol 52, pp 169–210.
17.
JohansenS. (1995), ‘Likelihood-based inference in cointegrated vector autoregressive models’, Oxford University Press, Oxford.
18.
KomiyaR. (1967), ‘Non-traded goods and the pure theory of international trade’, International Economic Review, Vol 8, pp 132–152.
19.
KruegerA. (1980), ‘Trade policy as an input to development’, American Economic Review, Vol 70, pp 188–292.
20.
KwiatkowskiD.PhillipsP.C.SchmidtP.ShinY. (1992), ‘Testing the null hypothesis of stationarity against the alternative of a unit root’, Journal of Econometrics, Vol 54, pp 159–178.
21.
LimC.McAleerM. (2000), ‘A seasonal analysis of Asian tourist arrivals to Australia’, Applied Economics, Vol 32, pp 499–509.
22.
McKinnonR. (1964), ‘Foreign exchange constraints in economic development and efficient aid allocation’, Economic Journal, Vol 74, pp 388–409.
23.
MackinnonJ. (1991), ‘Critical values for cointegration tests in long-run economic relationships’, in EngleR. F.GrangerC. W. J., eds, Readings in Cointegration, Oxford University Press, New York, pp 267–276.
24.
NelsonC.R.PlosserC.I. (1982), ‘Trends and random walks in macroeconomic time series: Some evidence and implications’, Journal of Monetary Economics, Vol 10, pp 139–162.
25.
NeweyW.WestK. (1987), ‘A simple, positive semi-definite, heteroskedasticity and autocorrelation consistent covariance matrix’, Econometrica, Vol 55, pp 703–708.
26.
Osterwald-LenumM. (1992), ‘A note with quantiles of the asymptotic distribution of the maximum likelihood cointegration rank test statistics’, Oxford Bulletin of Economics and Statistics, Vol 54, pp 461–472.
27.
PapatheodorouA. (1999), ‘The demand for international tourism in the Mediterranean region’, Applied Economics, Vol 31, pp 619–630.
28.
PayneJ.MervarA. (2002), ‘A note on modelling tourism revenues in Croatia’, Tourism Economics, Vol 8, No 1, pp 103–109.
29.
PhillipsP.C. (1987), ‘Time series regression with unit roots’, Econometrica, Vol 2, pp 277–301.
30.
PhillipsP.C.PerronP. (1988), ‘Testing for a unit root in time series regression’, Biometrika, Vol 75, pp 335–346.
31.
RunkleD. (1987). ‘Vector autoregressive and reality’, Journal of Economic and Business Statistics, Vol 5, pp 437–454.
32.
SimsC. A. (1980), ‘Macroeconomics and reality’, Econometrica, Vol 48, pp 1–48.
