Examining the causal impacts of tourism, globalization, economic growth and carbon emissions in tourism island territories: bootstrap panel Granger causality analysis

Abstract

In this paper, we examine the direction of causality between tourism, economic growth and carbon emissions in a multivariate framework that incorporates the newly introduced globalization index as an additional variable. In order to achieve the research objective, we employed panel Granger causality testing approach as suggested by Konya [(2006). Exports and growth: Granger causality analysis on OECD countries with a panel data approach. Economic Modelling, 23(6), 978-992] built on the Seemingly Unrelated Regressions and Wald tests that account for heterogeneity, cross-sectional dependence, and also produces country-specific bootstrap critical values, for a panel of 16 small island developing countries over the periods 1995-2014. Regarding the direction of causality between the variables, empirical results provide evidence in support of demand-flowing and supply-leading hypotheses, and that factors that contribute to environment pollutions are more internal, particularly within the tourism island territories.