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Devaluation, pass-through and foreign reserves dynamics in a tourism economy

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Listed:
  • Chao, Chi-Chur
  • Lu, Lee-Jung
  • Lai, Ching-Chong
  • Hu, Shih-Wen
  • Wang, Vey

Abstract

This paper examines the effects of currency devaluations on goods prices and foreign reserves for a small-open economy with inbound tourism. Tourism transforms non-traded goods into exportable goods. Devaluations yield an over pass-through to the prices of the non-traded tourism goods. This may hurt the trade balance and hence lead to a decline in foreign reserves for the economy.

Suggested Citation

  • Chao, Chi-Chur & Lu, Lee-Jung & Lai, Ching-Chong & Hu, Shih-Wen & Wang, Vey, 2013. "Devaluation, pass-through and foreign reserves dynamics in a tourism economy," Economic Modelling, Elsevier, vol. 30(C), pages 456-461.
    • Handle: RePEc:eee:ecmode:v:30:y:2013:i:c:p:456-461
    DOI: 10.1016/j.econmod.2012.09.050
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    Cited by:

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    2. Wamboye, Evelyn F. & Nyaronga, Peter John & Sergi, Bruno S., 2020. "What are the determinant of international tourism in Tanzania?," World Development Perspectives, Elsevier, vol. 17(C).
    3. Ngassam, Sylvain B. & Asongu, Simplice A. & Ngueuleweu, Gildas Tiwang, 2024. "A revisit of the natural resource curse in the tourism industry," Resources Policy, Elsevier, vol. 88(C).
    4. Roberto Balado-Naves & David Boto-García & José Francisco Baños-Pino, 2024. "A multisector growth model for testing the Tourism-Led Growth versus the Beach Disease hypotheses," Efficiency Series Papers 2024/01, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    5. Muntasir Murshed & Haider Mahmood & Tarek Tawfik Yousef Alkhateeb & Suvajit Banerjee, 2020. "Calibrating the Impacts of Regional Trade Integration and Renewable Energy Transition on the Sustainability of International Inbound Tourism Demand in South Asia," Sustainability, MDPI, vol. 12(20), pages 1-17, October.
    6. Manuel González-Gómez, 2022. "European outbound tourism expansion on the islands of Cape Verde," Tourism Economics, , vol. 28(4), pages 1129-1150, June.
    7. Akhil Sharma & Tarun Vashishat & Abdul Rishad, 2019. "The consequences of exchange rate trends on international tourism demand: evidence from India," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 21(2), pages 270-287, December.

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    More about this item

    Keywords

    Tourism; Exchange rate; Pass-through;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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