The Economic Cycles of Tourism

Tourism plays a very important role in the economy by contributing to other economic activities through multiplier effects. The objective of this paper is to analyse the economic cycles of tourism and their linkages to the rest of economic system. To this end, we formulate model which integrates the tourist life cycle within the dynamic evolution of the economy. The model converges to stationary state as cultural and environmental externalities evolve above the optimal social level. The model leads to an econometric specification which is estimated with data from the Canary Islands, a region dependent on tourism and environmental resources for its development. The production cycle are strongly correlated with the tourist activity and with the index of environmental deterioration, observing long run saturation effect for some markets. However, the new cycles are reactivated by new origin markets, compensating the negative effects experienced in the preceding cycles.