1 Tourism and Fluctuations in the Hawaiian Economy

Time series methods are used to investigate the importance of tourism to the State of Hawaii. The Hawaiian economy exhibits substantial comovement between the number of tourists and income and employment, especially at long-run frequencies. Tourism has its most immediate impact on gross state product, followed in a few months by personal income. Employment is affected after a lag of one year. The Oahu and Kauai economies are most sensitive to fluctuations in the volume of tourism. The Maui economy is correlated with agricultural shocks while the Big Island fluctuates most strongly with earnings from federal government employment. 2 Tourism and Fluctuations in the Hawaiian Economy The modern era of tourism in Hawaii began with the introduction of commercial jet service in 1959. By reducing the money and time costs of traveling to Hawaii the jet plane touched off an era of rapid growth in tourism to Hawaii. Visitor arrivals increased from 171,367 in 1958 to 242,994 in 1959. The number of visitors topped one million in 1967, tw