Exploring causality between tourist inflows and corruption: New evidence from Brazil and Mexico

The present study examines the causal nexus between tourist inflows and corruption in Brazil and Mexico. Multivariate cointegrated error-correction models are employed to assess the bi-directional nature of short- and long-run Granger-causality. Our results support the contention that causality between tourist inflows and corruption is significantly bidirectional, both in the short- and long-run. Although long-run causality between the variables is significantly bidirectional in Mexico, short-run causality is only unidirectional from tourist inflows to corruption without feedback. A prolonged productive cycle of “sanding the wheels” is supported in Brazil whereby less corruption causes higher tourist inflows and in turn, lowers corruption.