Tourism as a Long-run Economic Growth Factor: an Empirical Investigation for Greece Using Causality Analysis

This paper examines empirically the tourism impact on the long-run economic growth of Greece by using the causality analysis among real gross domestic product, real effective exchange rate and international tourism earnings. A multivariate autoregressive VAR model is applied for the examined period 1960:Ι – 2000:IV. The results of cointegration analysis suggested that there is one cointegrated vector among real gross domestic product, real effective exchange rate and international tourism earnings. Granger causality tests based on error correction models (ECM), have indicated that there is a “strong Granger causal” relation between international tourism earnings and economic growth, there is a “strong causal” relation between real exchange rate and economic growth, while the relation between economic growth and international tourism earnings is simply a “causal relation” and lastly the relation between real exchange rate and international tourism earnings is simply a “causal relation” as well. keywords: tourism earnings, economic growth, Granger causality