The impact of tourism on deficit in balance of payments of Pakistan: an application of bounds testing approach to cointegration (original) (raw)
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Asymmetric impact of tourism on the balance of payments in Pakistan: evidence from non-linear ARDL
Journal of Economic and Administrative Sciences, 2021
PurposeThe aim of the paper is to determine the asymmetric impact of tourism on the deficit in the balance of payments (BOPs).Design/methodology/approachThe research uses the non-linear autoregressive distributed lag (ARDL) model to investigate the asymmetric impact of tourism on Pakistan's BOPs deficit using quarterly data from 1995 to 2019.FindingsThe finding reveals that due to the positive change in tourism, the BOPs deficit decreases by 27%, although due to the negative change in tourism, the BOPs deficit rises by 2.3%. In addition, the significance of F-statistics (10.609) confirms the existence of co-integration between tourism and the deficit in the BOPs. The Wald test confirms the asymmetric association between tourism and the deficit in the BOPs over the long term.Research limitations/implicationsIn order to improve tourism in Pakistan, policymakers must consider the following implications. First, there is a need for an adequate infrastructure that can help the tourist...
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Purpose: The prime objective of this study is to re-investigate the tourism-led growth hypothesis by accommodating structural breaks over the annual period 1988-2014 for Pakistan. This study used two measure of tourism development -tourist arrivals and tourism expenditure per capita to explore the relationship between tourism and economic growth. Methodology: The unit root problem is tested by applying Ng-Perron unit root test. However, Perron, (1997) single structural break and Clemente et al. (1998) double structural breaks unit root tests also employed. To examine the long relationship between tourism and economic growth, we applied newly invented Bayer-Hanck, (2013) combine cointegration approach in the presence of structural breaks. The robustness of combine cointegration approach is tested by Johansen cointegration technique. Further, VECM Granger causality is used to understand the direction of causality during structural shocks. Findings: We found all data series stationary ...
SAGE Open
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