Paper Title
Estimating The Effects of Tourism on Economic Growth and Co2 Emissions in The Canadian Economy
Abstract
This empirical study investigated the cointegration and causal relationship between tourism, CO2 emissions and economic growth in the Canadian economy for the period of 1986-2016 by applying the Johansen Juseliusmultivariate cointegration technique.Granger causality and the vector error correction model have been utilized to show the causation as well as log-run and short-run dynamic behaviour among these variables.All the variables are found to be co-integrated, which indicates the existence of a unique long-run relationship among CO2, growth rate of GDP and tourism.The study also shows that in Canada, tourism inverselyaffectsC02emissions whereas it positively affects economic growth. The short-run behavior of our model has been examined by estimating a vector error correction model in which it is found that C02 emissions converge to the long term equilibrium path by a 0.56 percent speed of adjustment. In addition, a bi-directional causality relationship has been found between tourism and CO2 emissions. Further, the results of the impulse response and variance decompositions show that a large percentage of the forecasted error variances of CO2 emissionsare explained by the exogenous shocks to tourismvolume.The findings of the present study suggest that the Canadian government should continue with strong efforts to attract tourists whileat the same time maintaining the sustainability of the tourism sector.
Keywords - Tourism, Economic Growth, CO2 Emissions, Vector Error Correction