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The determinants of demand for tourism in Turkey: Does terror-threat matter? A Markov Regime Switching-VAR approach

Author

Listed:
  • Faik Bilgili

    (Faculty of Economics and Administrative Sciences, Erciyes University, 38039, Kayseri, Turkey)

  • Serap Çoban

    (Department of Economics, Nevşehir Hacı Bektaş Veli University, Turkey)

  • Cumali Marangoz

    (Department of Business, Ağrı İbrahim Çeçen University, Turkey)

  • Emre Bulut

    (Department of Business, Ağrı İbrahim Çeçen University, Turkey)

  • Sevda Kuşkaya

    (Justice Vocational College, Erciyes University, Turkey)

Abstract

This paper investigates the impacts of potential determinants of demand for tourism in Turkey through Markov Regime Switching-Vector Auto Regression (MS-VAR) estimations from 1999 to 2017 on monthly data. The determinants are income level, exchange rates and the threat of terror incidences. The terror variable, following the Global Terrorism Index (GTI) 2017 report, is calculated for Turkey by the author. This research has conducted two separate MS-VAR models to observe the relevant parameters’ signs of the demand for tourism function. Both MS-VAR models revealed that income level and exchange rates have positive influences on tourism while the terror threat has a negative impact on tourism in Turkey. Terror adversely affects the demand for tourism in the short-term in which terror has occurred in the nearest past (i.e., a month ago). The MS-VAR models also yield that a similar negative impact of terror on tourism activities does not appear over the longer periods.

Suggested Citation

  • Faik Bilgili & Serap Çoban & Cumali Marangoz & Emre Bulut & Sevda Kuşkaya, 2021. "The determinants of demand for tourism in Turkey: Does terror-threat matter? A Markov Regime Switching-VAR approach," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 71(4), pages 587-607, December.
    • Handle: RePEc:aka:aoecon:v:71:y:2021:i:4:p:587-607
    DOI: 10.1556/032.2021.00041
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    More about this item

    Keywords

    tourism; terror; terrorism index; exchange rates; MS-VAR estimation; Turkey; government policy;
    All these keywords.

    JEL classification:

    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z3 - Other Special Topics - - Tourism Economics

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