This Is AuburnElectronic Theses and Dissertations

Three Essays in Tourism, Trade, and Economic Growth




Cheng, Ka Ming

Type of Degree





This dissertation consists of three chapters in tourism, trade, and economic growth. Chapter one investigates the short and long run effects of the change in the nominal exchange rate on the US tourism trade balance, focusing on the J-curve effect following currency devaluation. The export revenue and import expenditure functions are estimated separately to capture the dynamics of the time path of each individual function to an exchange rate shock with structural vector autoregressive methodology. Although empirical results cannot statistically confirm a J-curve effect in tourism trade of the United States, the approach utilizing disaggregated trade data avoids the aggregation bias of data across all industries. There is a paucity of empirical studies on the balance of trade in tourism in the literature, and the present study fills this gap by providing an economic model to analyze the effect of the nominal exchange rate on the US trade balance in tourism. Chapter 2 examines the determinants on Hong Kong tourism demand for the top three major tourist arrival countries, namely Mainland China, Taiwan and Japan; with an error correction model. Specifically, this chapter will examine the effects of relaxing of the visa requirement, the launch of Individual Visit Scheme, for Mainland Chinese tourists in 2003. Empirical results show that tourists are income elastic and consider international tourism a luxury good. Tourists are more sensitive to the change of the nominal exchange rate than the change in the foreign price level. The positive effect of the launch of Individual Visit Scheme for Mainland Chinese tourists outweighs the adverse impact of the Severe Acute Respiratory Syndrome (SARS) on tourism demand for Hong Kong. Chapter 3 analyzes the impacts of trade openness, tourism, investment, and human capital investment on economic growth in Mauritius. Aggregate and disaggregated measures of these determinants examine their effects on economic growth. The use of the error correction methodology can capture the dynamics of the output growth to the specific determinants of growth. Empirical results indicate positive effects of the Export Processing Zone, tourism, investment, and human capital investment. The strategic tourism marketing policy aimed at high spending tourists has led to economic growth.