EXAMINATION OF ECONOMIC GROWTH AND TOURISM IN BARBADOS: TESTING THE SUPPLYSIDE HYPOTHESIS

Abstract

The goal of this study is to examine the supply side hypothesis of tourism demand, that is, to answer the question: Does economic growth in Barbados spur tourism growth. Results suggest that there is a long-run relationship between real GDP in Barbados and tourist arrivals. Specifically, we find that a 1% expansion in real GDP is associated with a 1.2% increase in tourist arrivals. Further, our Granger causality test suggests that the supply-side hypothesis is valid for Barbados.