Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/227945 
Year of Publication: 
2019
Series/Report no.: 
AGDI Working Paper No. WP/19/067
Publisher: 
African Governance and Development Institute (AGDI), Yaoundé
Abstract: 
This study investigates the nexus between tourism development and house prices in the Republic of Cyprus over the period spanning from 2005Q1 to 2016Q4. Tourism indicators vis-à-vis tourism arrivals along with other explanatory variables (domestic credit, land area per person, and the consumer price index) are employed in a multivariate Autoregressive Distributed Lag (ARDL)-bound test model. The empirical results indicate a significant evidence of cointegration. Indicatively, an observed adjustment of about 44% from short-run to long-run implies that the model is not relatively slow to adjust to disequilibrium. Importantly, a percent increase in tourism arrivals is observed to cause a rise in house price by about 37%. Expectedly, it is statistically observed that as the land area per person decreases, it is accompanied by a hike in house price. Also, the impacts of domestic credit offered to private enterprises and the consumer price index are different from the results in previous studies. As a policy guide, the government of Cyprus and stakeholders in the tourism and housing sectors should outline a strategy that will ensure the social welfare of people such that housing availability is not hampered by tourism activities.
Subjects: 
house prices
tourism
domestic credit
cointegration
ARDL
Republic ofCyprus
JEL: 
C22
O50
R31
Document Type: 
Working Paper

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