Local economic growth can be spurred by casino tourism, yet this may take place at the expense of the external regions where tourists live. We show that Pigouvian taxes should be imposed on gambling activity to attenuate its external cost. The tax may boost social welfare in the local and...

This paper uses a Markov switching model (MSM) to decompose Macao’s tourism cycle into high and low growth states (HGS, LGS) for the period of 2005Q2–2017Q2. The likelihood of the cycle maintaining HGS is 93% but the risk of staying in LGS is 80%. The Macao cycle is favorably asymmetric,...