ECONOMIC GROWTH AND INTERNATIONAL VISITORS TO MEXICO: A VAR MODEL

Abstract

Mexico’s momentum in economic growth recently has been lost, reporting 1.8% and 2.1% annual increases in total real gross domestic product (GDP) in 2013 and 2014, respectively. Policy reforms, particularly energy policy, intended to stimulate greater growth will need time to take hold. Increasingly, the tourism industry is viewed a potential growth driver of Mexico’s economy. We estimate a vector autoregressive (VAR) model to explore the relationship between Mexico’s GDP and the number of international visitors over time. Our results reveal a Granger causality relationship between GDP and the number of international tourists over the period of the study, which suggests that the promotion of tourism can generate significant support to the economic dynamism of the country.