Tourism Development and Air Pollution in Caribbean SIDs: A Bootstrap Panel Granger Causality Analysis

Abstract

This paper investigates the possibility of Granger causality between tourism development and air pollution in twelve Caribbean small island developing states (SIDs) over the period 1995-2017 in a panel-based model that both allows for the assessment of causality in countries with cross-sectional dependency and heterogeneity and avoids the problem of incorrect specification associated with conventional panel unit root and cointegration tests. The empirical results indicate bidirectional causality between tourism and air pollution for Barbados, Dominican Republic, Jamaica, St. Lucia, and Trinidad and Tobago; unidirectional causality running from tourism to air pollution in Antigua and Barbuda, Cuba, and Guyana; reverse causality from air pollution to tourism in The Bahamas, British Virgin Islands and Haiti, while no causality is found for St. Kitts and Nevis. Our empirical findings provide important policy implications for the Caribbean countries being studied.