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Effect of tourism on economic growth of Sri Lanka: accounting for capital per worker, exchange rate and structural breaks

Stauvermann, P.J. and Kumar, Ronald R. and Shahzad, S.J.H. and Kumar, N.N. (2016) Effect of tourism on economic growth of Sri Lanka: accounting for capital per worker, exchange rate and structural breaks. Economic Change and Restructuring . pp. 1-20. ISSN 1573-9414

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Abstract

We explore the nexus between tourism, exchange rate and economic growth in Sri Lanka over the period 1980–2014. Using the augmented Solow (Q J Econ 70(1):65–94, 1956) framework and the ARDL bounds procedure whilst accounting for structural breaks using Bai and Perron (J Appl Econ 18(1):1–22, 2003) multiple break tests, the short-run and long-run association and impacts are examined. The results confirm the presence of a long-run association between tourism receipts (% of GDP), exchange rate, capital per worker and output per worker. The regression results show a 1% increase in tourism receipts results in a 0.03 and 0.06% increase in output per worker in the short-run and long-run, respectively. A unidirectional causality is noted from tourism to output per worker; from exchange rate to output per worker and capital per worker; and from output to capital, in per worker terms. Finally, we note that although structural breaks periods have negative association with economic growth, they are not statistically significant.

Item Type: Journal Article
Additional Information: Published online only
Subjects: H Social Sciences > HA Statistics
H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Faculty of Business and Economics (FBE) > School of Accounting and Finance
Depositing User: Ronald Kumar
Date Deposited: 27 Nov 2016 22:35
Last Modified: 27 Nov 2016 22:35
URI: https://repository.usp.ac.fj/id/eprint/9501

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