Is the tourism–growth relationship asymmetric in the Cook Islands? Evidence from NARDL cointegration and causality tests

We examine whether tourism sector development measured by visitor arrivals per capita has asymmetric growth effects in the Cook Islands using quarterly data from 2010Q1 to 2016Q3. Asymmetric cointegration, long-run elasticities, and dynamic multipliers are estimated using the nonlinear autoregressiv...

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Bibliographic Details
Published in:Tourism economics : the business and finance of tourism and recreation 2020-06, Vol.26 (4), p.658-681
Main Authors: Kumar, Nikeel, Kumar, Ronald Ravinesh, Kumar, Radika, Stauvermann, Peter Josef
Format: Article
Language:English
Subjects:
Arrivals
Asymmetry
Autoregressive models
Bidirectionality
Causality
Cointegration analysis
Economic development
Economic growth
Elasticity
Endogenous
GDP
Gross Domestic Product
Islands
Per capita
Time series
Tourism
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Summary:We examine whether tourism sector development measured by visitor arrivals per capita has asymmetric growth effects in the Cook Islands using quarterly data from 2010Q1 to 2016Q3. Asymmetric cointegration, long-run elasticities, and dynamic multipliers are estimated using the nonlinear autoregressive distributed lag model developed by Shin et al. Asymmetric causality testing is done using the asymmetric vector autoregression approach with insights from Hatemi-J. We identify structural breaks using the Lee and Strazicich multiple endogenous structural break unit root test. The results indicate that a 1% increase in visitor arrivals would increase gross domestic product (GDP) per capita by 0.92%, whereas a 1% decrease in visitor arrivals would decrease GDP per capita by 0.34%. The identified breaks, 2013Q2 and 2015Q3, are positive and significant in the short run only. The causality result confirms a bidirectional association, thus mutually reinforcing the asymmetric relationship between visitor arrivals and economic growth.
ISSN:1354-8166
2044-0375
DOI:10.1177/1354816619859712