{
  "title": "Long and Short-term Impact of Tourism on Growth in Small Developing States",
  "publication": "IMF Working Papers, May 23, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2025/05/23/long-and-short-term-impact-of-tourism-on-growth-in-small-developing-states-567125",
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  "summary": "We explore the relationship of recessions and tourism cycles on the economic performance of tourism-dependent Small Developing States (SDS).",
  "sections": [
    {
      "heading": "Methodology and Scope",
      "content": "- Focus: relationship of recessions and tourism cycles on economic performance of tourism-dependent Small Developing States (SDS).\n- Empirical approach: local projections regressions.\n- Outcomes analyzed: potential output growth and its drivers—investment and employment.\n- Short-run evaluation: a natural experiment using Cabo Verde to assess tourism's short-term relation to growth."
    },
    {
      "heading": "Key Findings",
      "content": "- Long-term recession effects:\n  - \"The long-term influence of recessions are less persistent in SDS than in larger emerging markets.\"\n  - Tourist-dependent economies experience faster recoveries from recessions.\n- Short-run elasticity:\n  - Using Cabo Verde as a natural experiment, \"tourism's short-run elasticity to growth is around 0.4 over 12 months.\"\n- Spillovers:\n  - There are \"limited spillovers to non-tourism areas.\"\n- Drivers examined:\n  - The analysis explicitly assesses investment and employment as drivers of potential output growth."
    },
    {
      "heading": "Analytical Highlights",
      "content": "- Local projections regressions were used to quantify dynamics of recessions and tourism cycles on potential output growth.\n- The Cabo Verde case provides micro-level evidence for short-run tourism–growth elasticity over a 12-month horizon."
    },
    {
      "heading": "Implications and Areas for Further Research",
      "content": "- For tourism-dependent SDS:\n  - Faster recoveries from recessions suggest resilience patterns that differ from larger emerging markets.\n- For short-term stabilization:\n  - A measured short-run elasticity of \"around 0.4 over 12 months\" indicates a quantitatively meaningful role for tourism in near-term growth fluctuations, with \"limited spillovers to non-tourism areas\" highlighting potential sectoral concentration of effects.\n- Suggested research focus (based on study design and findings):\n  - Further investigation of channels linking tourism cycles to investment and employment in SDS.\n  - Comparative analysis between tourism-dependent SDS and larger emerging markets to understand drivers of differing recovery dynamics.\n\nDaniel Cunha, Rodrigo Garcia-Verdu, Pedro Juca Maciel; May 23, 2025; IMF Working Papers 2025, 103 (2025).\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2025/05/23/long-and-short-term-impact-of-tourism-on-growth-in-small-developing-states-567125"
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    "Authors: Daniel Cunha, Rodrigo Garcia-Verdu, Pedro Juca Maciel",
    "Published: May 23, 2025",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229009591.001",
    "Focus: relationship of recessions and tourism cycles on economic performance of tourism-dependent Small Developing States (SDS).",
    "Empirical approach: local projections regressions.",
    "Outcomes analyzed: potential output growth and its drivers—investment and employment.",
    "Short-run evaluation: a natural experiment using Cabo Verde to assess tourism's short-term relation to growth.",
    "Long-term recession effects:",
    "Short-run elasticity:",
    "Spillovers:",
    "Drivers examined:",
    "Local projections regressions were used to quantify dynamics of recessions and tourism cycles on potential output growth.",
    "The Cabo Verde case provides micro-level evidence for short-run tourism–growth elasticity over a 12-month horizon.",
    "For tourism-dependent SDS:",
    "For short-term stabilization:",
    "Suggested research focus (based on study design and findings):",
    "**Working Paper**"
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