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Tourism, Real Effective Exchange Rate and Economic Growth: Empirical Evidence for Croatia
Author(s) -
Pavlic Ivana,
Svilokos Tonci,
Tolic Meri Suman
Publication year - 2014
Publication title -
international journal of tourism research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.155
H-Index - 58
eISSN - 1522-1970
pISSN - 1099-2340
DOI - 10.1002/jtr.1986
Subject(s) - cointegration , economics , exchange rate , econometrics , openness to experience , effective exchange rate , real gross domestic product , short run , gross domestic product , error correction model , tourism , variable (mathematics) , depreciation (economics) , macroeconomics , microeconomics , mathematics , capital formation , profit (economics) , psychology , social psychology , mathematical analysis , financial capital , political science , law
The aim of this paper is to examine the long‐run and short‐run relationship between tourism, real effective exchange rate and economic growth in Croatia. The econometric framework used for analysis is the Johansen Maximum Likelihood cointegration technique. For testing the stability of long‐run equilibrium relationship vector error correction model technique has been applied on a quarterly data set covering the period 1996–2013. The main findings of the paper confirm the stability of the long‐run equilibrium relationship between tourist arrivals (ARRIVAL), openness of the economy (OPEN) and real effective exchange rate as independent variable and gross domestic product (GDP) as dependent variable in Croatia. Furthermore, the results indicate short‐run causality between OPEN and GDP, as well as between real effective exchange rate and GDP. Copyright © 2014 John Wiley & Sons, Ltd.