Tourism expenditures and crisis transmission: A general equilibrium GVAR analysis with network theory

According to the World Tourism Organization, during the last decades, tourism has become one of the largest and most dynamic economic industries in the world. In this work, we employ a Network General Equilibrium GVAR model to analyze the impact of tourism expenditures on GDP and our approach allows for the existence of dominant economies in the system. The model is estimated simultaneously as a system of equations for a large panel of world economies and the results show that the less developed economies are quite vulnerable to changes in the tourism expenditures of the dominant economies. Meanwhile, USA is found to be largely unaffected by shocks in the tourism expenditures of the less developed economies.