The Greek Tourism-Led Growth Revisited : Insights and Prospects

The paper investigates empirically the tourism-growth relationship in Greece, over the period 1960-2020. We find that the long-run relationship between tourism and output is positive and is characterized by a substantially faster convergence of output after a negative shock than after a positive one. Using asymmetric error-correction model analysis the results show that the short-term adjustment path occurs through the level of output for negative deviations from the long-run equilibrium, thus supporting the tourism-led growth hypothesis. Linear quantile regression analysis indicates that while the impact of tourism remains positive and significant across the output distribution it is stronger at lower quantiles of output than at higher ones. Our results have important policy implications, since the tourism-led growth hypothesis is a useful policy recommendation, but it should not be considered a cure-all policy