The Impacts of International Tourism Demand on Economic Growth of a Small Economy
Tourism Management, Vol. 32, No. 2, pp. 377-385, 2011
24 Pages Posted: 18 Jun 2009 Last revised: 14 Jun 2011
Date Written: June 18, 2009
This paper studies the impacts on economic growth of a small tourism driven economy caused by an increase in the growth rate of international tourism demand. We present a formal model and empirical evidence.
The ingredients of the dynamic model are a large population of intertemporally optimizing agents and an AK technology representing tourism production. The model shows that an increase in the growth of tourism demand leads to transitional dynamics with gradually increasing economic growth and increasing terms of trade. The empirical application for the case of Antigua confirms the theoretical findings.
Keywords: tourism demand, growth, economic dynamics, VEC model, Antigua and Barbuda
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