Testing dependence between GDP and tourism's growth rates

Abstract

The main aim of this paper is to link the economic behaviour and statistical properties of GDP and tourism receipts growth rates through modelling the dependence. To that end, two developed economies such as the United Kingdom (non-tourist oriented) and Spain (tourist-oriented), and an emerging economy such as Croatia (tourist-oriented) are considered as case studies. Therefore, a copula-based GARCH approach is employed to describe the dependence structure between GDP and tourism receipts growth rates. In this respect, any causality and cointegration between tourism and GDP could justify public policies that promote a more efficient public resource allocation in the tourism industry. Additionally, evidence of dependence between growth rates can justify the extent and direction of these policies. Results indicate that there is a significant, asymmetric and positive dependence between tourism and GDP growth rates for the three countries studied, though only for Croatia is it time-varying over time.