Economic Impact of Tourism on Nepal’s Economy Using Cointegration and Error Correction Model


Tourism is one of the growing service sectors in Nepal. In 2011 the direct and indirect contribution of the  Nepal tourism industry to total  GDP  and employment is expected to reach 6.7%  and 2.4% respectively (WTTC, 2011). The objective of this paper is to analyze the role of tourism in Nepalese economic growth. I use a trivariate model of real  Gross  Domestic  Product  (GDP),  international tourist arrivals, and real effective exchange rate to investigate the long-run and short-run relationship between tourism and economic growth. The Augmented Dickey-Fuller (ADF)  test is used to determine the order of integration of the series, and I employ the Engle-Granger cointegration procedure to test for the presence of a long-run relationship. By using annual macroeconomic data for Nepal for the period of 1962-2011, the results reveal that there is a cointegrating relationship between tourism and economic growth. READ MORE>>>

How to cite this paper:
Karki, D (2012). Economic impact of tourism in Nepal’s economy using cointegration and error correction model. Researchgate, 1-15. DOI: 10.13140/RG. 2.1. 4839.5684

Want to read my other articles VISIT HERE

Leave a Comment

Your email address will not be published. Required fields are marked *