Is tourism growth able to shrink economic inequalities? A DSGE analysis
Zhang, Hongru
Zhang, Hongru
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Journal article
Date
2023-02-21
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Tourism and Hospitality Management
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https://doi.org/10.1016/j.annale.2023.100089
Abstract
The aim of this paper is to investigate the relationship between inbound tourism and economic inequalities (income and wealth). We construct a dynamic stochastic general equilibrium (DSGE) small open-economy model that includes the tourism industry and the housing market. We focus on the recent Icelandic tourism boom, and our simulation results suggest a reduction in income inequality and an increase in wealth inequality. Inbound tourism thus has opposite effects on domestic income inequality and wealth inequality, so the Icelandic government faces a trade-off when formulating tourism-related policies to reduce inequalities, and the consequences may depend on the type of inequality that policymakers prioritize. Lastly, implications are provided based on results.
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Citation
Hongru Zhang, Yang Yang, Is tourism growth able to shrink economic inequalities? A DSGE analysis, Annals of Tourism Research Empirical Insights, Volume 4, Issue 1, 2023, 100089, ISSN 2666-9579, https://doi.org/10.1016/j.annale.2023.100089.
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Annals of Tourism Research Empirical Insights, Vol. 4, Iss. 1
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