LAUSR

ABSTRACT This paper investigates whether tourism expenditure and exchange rates influence local GDP for the city of Christchurch (New Zealand), following the 2010 and 2011 earthquakes. Domestic and international expenditures are analysed separately using vector auto-regression (VAR) models. We perform Granger causality tests to determine the directionality of the relationships uncovered. Our results show that increased domestic and international visitor spending is followed by a measurable and significant increase in local GDP. Exchange rates have a small but non-significant impact on international tourist spending. Stimulating tourism demand will be an essential element to achieve substantial economic growth in Christchurch. The findings have implications for policy making in terms of promoting economic growth in disaster prone areas.