Exploring the Nexus Between Tourism and Output in Cook Islands: An ARDL Bounds Approach

Kumar, Ronald Ravinesh ORCID: 0000-0001-9658-4896, Stauvermann, Peter J., Patel, Arvind and Kumar, Nikeel (2016) Exploring the Nexus Between Tourism and Output in Cook Islands: An ARDL Bounds Approach. Social Indicators Research : An International and Interdisciplinary Journal for Quality-of-Life Measurement. ISSN 0303-8300

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Official URL: http://link.springer.com/article/10.1007/s11205-01...

Abstract

Tourism plays an important role in the development of Cook Islands. In this paper we examine the nexus between tourism and growth using quarterly data over the period 2009Q1–2014Q2 using the recently upgraded ARDL bounds test to cointegration tool, Microfit 5.01, which provides sample adjusted bounds and hence is more reliable for small sample size studies. We perform the cointegration using the ARDL bounds test and examine the direction of causality. Using visitor arrival and output in per capita terms as respective proxy for tourism development and growth, we examine the long-run association and report the elasticity coefficient of tourism and causality nexus, accordingly. Using unit root break tests, we note that 2011Q1 and 2011Q2 are two structural break periods in the output series. However, we note that this period is not statistically significant in the ARDL model and hence excluded from the estimation. Subsequently, the regression results show the two series are cointegrated. The long-run elasticity coefficient of tourism is estimated to be 0.83 and the short-run is 0.73. A bidirectional causality between tourism and income is noted for Cook Islands which indicates that tourism development and income mutually reinforce each other. In light of this, socio-economic policies need to focus on broad-based, inclusive and income-generating tourism development projects which are expected to have feedback effect.

Item Type: Article
Additional Information: Article to be published in Social Indicators Research Copyright Springer Verlag in 2016, published in First Online in August 2015.
Divisions: Institute of Management > Bolton Business School
Depositing User: Tracey Gill
Date Deposited: 23 May 2016 18:16
Last Modified: 08 Mar 2018 11:56
Identification Number: 10.1007/s11205-015-1070-y
URI: http://ubir.bolton.ac.uk/id/eprint/873

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