Research Note: A Causality Analysis of Tourism as a Long-Run Economic Growth Factor in Jamaica

Abstract

This study uses multivariate cointegration, error-correction modelling and variance decomposition to analyse the causal relationship between tourism and economic growth in Jamaica. The study finds, among other things, that there is a long-run positive relationship between economic growth and tourism. An increase in tourism receipts tends to have a positive impact on GDP. Current GDP is influenced by past values of GDP and those of tourism receipts, whereas tourism receipts are influenced only by their past values. Thus, policies that are geared towards attracting more tourists should be promoted, as this will lead not only to an increase in tourism receipts but also to an increase in the overall economic growth of Jamaica.