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Panel threshold analysis of Taiwan's outbound visitors

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  • Che, Chou Ming
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    Abstract

    The main purpose of this research is to explore the panel threshold effect of consumer prices in destination countries on the number of Taiwanese outbound visitors. It is assumed that a destination country's inflated prices contain one or more threshold values and have nonlinear relation with the number of Taiwanese people visiting that particular country, with asymmetric upper and lower boundaries. Scrutinizing 14 countries during a 14-year period (from 1998 to 2011), this study examines the panel threshold effects based on balanced panel data that comprises 196 observations. The empirical findings suggest the absence of any significant panel threshold effect, regardless of the assumed double or single threshold effect. According to an ensuing inter-segment symmetry analysis, impact factors within the range of study invariably indicated significantly positive relations, a sign that a destination country's consumer price index (CPI) has a positive linear relation with the number of Taiwanese people traveling abroad. In other words, the rising prices in destination countries do not reduce Taiwanese people's demand for traveling abroad. Instead, it reflects the improving economy as well as surging quality of life in a destination country that encourages refinement of products, perfects traveling facilities, and consequently lures quality-seeking tourists as well as Taiwanese outbound visitors. The finding gives a clear guidance that Taiwan's tourism policy shall add sophistication to services in every aspect.

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    Bibliographic Info

    Article provided by Elsevier in its journal Economic Modelling.

    Volume (Year): 33 (2013)
    Issue (Month): C ()
    Pages: 787-793

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    Handle: RePEc:eee:ecmode:v:33:y:2013:i:c:p:787-793

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    Web page: http://www.elsevier.com/locate/inca/30411

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    Keywords: Number of people traveling abroad; Consumer price index (CPI); Threshold effect;

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    1. Bruce E. Hansen, 1997. "Threshold effects in non-dynamic panels: Estimation, testing and inference," Boston College Working Papers in Economics 365, Boston College Department of Economics.
    2. Donald W.K. Andrews & Werner Ploberger, 1992. "Optimal Tests When a Nuisance Parameter Is Present Only Under the Alternative," Cowles Foundation Discussion Papers 1015, Cowles Foundation for Research in Economics, Yale University.
    3. Bruce E. Hansen, 1996. "Sample Splitting and Threshold Estimation," Boston College Working Papers in Economics 319., Boston College Department of Economics, revised 12 May 1998.
    4. Hansen, B.E., 1991. "Inference when a Nuisance Parameter is Not Identified Under the Null Hypothesis," RCER Working Papers 296, University of Rochester - Center for Economic Research (RCER).
    5. Oppermann, Martin & Cooper, Malcolm, 1999. "Outbound Travel and Quality of Life: The Effect of Airline Price Wars," Journal of Business Research, Elsevier, vol. 44(3), pages 179-188, March.
    6. Andreas Papatheodorou, 1999. "The demand for international tourism in the Mediterranean region," Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 619-630.
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