Title: Econometric analysis of real exchange rate shocks and real growth of the tourism sector in South Africa

Authors: Paul-Francois Muzindutsi; Jean Claude Manaliyo

Addresses: School of Accounting, Economics and Finance, University of KwaZulu-Natal, P.O. Box X01, Scottsville 3209, South Africa ' Department of History, International Relations and Tourism, North-West University, Mafikeng Campus, P.O. Box 2735, Mafikeng, South Africa

Abstract: The aim of this study was to analyse the interactions between real exchange rate and real income from the tourism sector in South Africa. The vector autoregressive model (VAR) with Johansen multivariate cointegration approach was used to analyse monthly time series from January 2007 to December 2015. This study found a negative long-run relationship between the real exchange rate and real tourism revenue (LTR) in South Africa, where the depreciation of the local currency is associated with an increase in the LTR. Short-run results revealed that LTR is affected by short-run fluctuations in the real exchange rate; while Granger causality test showed that the real exchange rate Granger causes LTR. This study concluded that the weakening of the local currency, against major foreign currencies, seems to be good news for the South African tourism sector.

Keywords: cointegration; real exchange rate; tourism income; South Africa; VAR model.

DOI: 10.1504/IJMEF.2018.093787

International Journal of Monetary Economics and Finance, 2018 Vol.11 No.3, pp.205 - 214

Received: 16 Sep 2016
Accepted: 28 Sep 2016
Published online: 06 Aug 2018 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article