THE GREEK TOURISM-LED GROWTH REVISITED:
INSIGHTS AND PROSPECTS
Sarantis Lolos
Panteion University
Panagiotis Palaios
National and Kapodistrian University of Athens
Evangelia Papapetrou
Bank of Greece and National and Kapodistrian University of Athens
Abstract
The paper investigates empirically the tourism-growth relationship in Greece, over the period 1960-2020. We find that the long-run relationship between tourism and output is positive and is characterized by a substantially faster convergence of output after a negative shock than after a positive one. Using asymmetric error-correction model analysis the results show that the short-term adjustment path occurs through the level of output for negative deviations from the long-run equilibrium, thus supporting the tourism-led growth hypothesis. Linear quantile regression analysis indicates that while the impact of tourism remains positive and significant across the output distribution it is stronger at lower quantiles of output than at higher ones. Our results have important policy implications, since the tourism-led growth hypothesis is a useful policy recommendation, but it should not be considered a cure-all policy.
JEL- classification: C21, C24, F43, L83
Keywords: tourism, economic growth, tourism-led growth hypothesis, threshold cointegration approach, quantile regression approach.
Acknowledgements: The authors wish to gratefully acknowledge Emi Stamatopoulou, Hiona Balfoussia and an anonymous referee for constructive comments and suggestions that improved the quality of the paper. The views expressed are those of the authors and not those of their respective institutions.
Correspondence:
Evangelia Papapetrou
Bank of Greece
21 El. Venizelos Avenue
10250 Athens, Greece
Tel.: +30 210 320 2377
E-mail: epapapetrou@bankofgreece.gr