Analysing the dynamic co-movement between tourism and expected economic growth considering extreme events

ABSTRACT

In the post epidemic period, it is important to clarify the relationship between economic growth and tourism growth. The aim of this study is to characterize the co-movement between expected macroeconomic conditions and inbound tourism, focussing on the nonlinear relationship between these variables. Dynamic copula-based GJR-GARCH models are employed to measure nonlinear dependence. Total inbound tourism to Thailand and its disaggregation for its 10 main origin countries, are considered in the empirical study. The results show that there exists significant co-movement between expected economic growth and inbound tourism, and prove the importance of considering nonlinearities and extreme events. Also, copula nonlinear Granger causality is used to conclude that inbound tourism and expected economic growth have nonlinear bi-directional and unidirectional Granger causality relationship. Finally, this paper puts forward some policy suggestions to restore tourism and boost economic growth in the post epidemic period.