Edited by Larry Dwyer, Alison Gill and Neelu Seetaram
13 CGE modeling Larry Dwyer and Tien Duc Pham INTRODUCTION There is now an extensive literature on evaluating the economic impacts of tourism. This literature seeks to show how the impacts of changes in tourism expenditure, due perhaps to improved destination marketing and promotion, development of special events or external shocks such as terrorist attacks, can be evaluated in economic terms. An economic impact analysis estimates the changes that take place in an economy due to some existing or proposed project, action, event, or policy resulting in increased income and expenditure for a range of different stakeholders, many of whom are not directly connected with the tourism industry. As typically employed in tourism research and policy analysis, economic impact analyses trace the flows of spending associated with tourism activity in an economy through business, households and government to identify the resulting changes in economic variables such as sales, output, government tax revenues, household income, value added, and employment. A major objective of such estimates has been to inform policy makers as to the appropriate allocation of resources both within the tourism sector itself and between tourism and other industry sectors. The effects of tourist expenditure on a tourism destination/region can be estimated using economic models that identify and quantify the linkages between the different sectors of the local economy and the linkages with other regions in the economy. Almost every industry in the economy is affected to some extent by the indirect and induced effects of the initial tourist expenditure....
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