Periodic sponge effect on tourism

Abstract: " This paper investigates the relationship between the service sector and GDP in Denmark by adopting unit root test, Johansen cointegration test and Granger causality test with yearly data. The characteristics of service sector against agriculture sector, industry sector are also discussed. Under the monthly scale, the behaviours of the number of rented hotel room, power production and IPI are studied. The deindustralization caused by the development of tourism and the financial crisis of 2008 is discussed. The existence of periodic sponge effect between tourism and the manufacturing is found. By presenting several convinced explanations, this phenomenon will help to understand the dynamic mechanism of the economic developments. In the context of flexicurity labour market with flexible employment policies in Denmark, the unemployment issue against the tourism, power production and IPI is explored. Lastly, an approach to calculate periodic sponge effect index with some examples of Denmark’s data is proposed.