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The Effects of Real Exchange Rates and Income on International Tourism Demand for the USA from Some European Union Countries

Author

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  • Serdar Ongan

    (Department of Economics, St. Mary’s College of Maryland, St. Mary’s City, MD 20686, USA)

  • Cem Işik

    (Department of Tourism Management, Atatürk University, Erzurum 25240, Turkey)

  • Dilek Özdemir

    (Department of Economics, Atatürk University, Erzurum 25240, Turkey)

Abstract

This paper investigates the effects of real exchange rates and income on inbound tourism demand (tourist arrivals) from Germany, France, the UK, the Netherlands, Italy, Spain, and Sweden to the USA over the period 1996Q3–2015Q1. To achieve this aim, the Harmonized Index of Consumer Prices (HICP) for Restaurants and Hotels was used for the first time—instead of using the general Consumer Price Index (CPI)—to transform the nominal exchange rate into the real exchange rate as an independent variable in tourism demand analysis models. Panel co-integration analysis under the cross-sectional dependence (CD) test and common correlated effects (CCE) approach was applied. Empirical results show that tourists visiting the USA are more sensitive to changes in the real exchange rate than changes in GDP. While French tourists respond highly to the GDP, British tourists respond highly to the real exchange rate. It should also be noted that the UK, having the highest responsiveness to the real exchange rate, is a country outside the Eurozone and also intends to leave the European Union.

Suggested Citation

  • Serdar Ongan & Cem Işik & Dilek Özdemir, 2017. "The Effects of Real Exchange Rates and Income on International Tourism Demand for the USA from Some European Union Countries," Economies, MDPI, vol. 5(4), pages 1-11, December.
    • Handle: RePEc:gam:jecomi:v:5:y:2017:i:4:p:51-:d:123300
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    2. Veli YILANCI & Sertaç HOPOĞLU & Hakan ERYÜZLÜ, 2023. "The impact of the economic policy uncertainty and geopolitical risks on tourism demand of Mexico," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(636), A), pages 147-164, Autumn.
    3. Muhammad Amin Hasan & Mr. Abdullah & Muhammad Arsalan Hashmi & Ali Sajid, 2022. "International Remittances and International Tourism Development in South Asia: The Moderating Role of Political Stability," Journal of Economic Impact, Science Impact Publishers, vol. 4(3), pages 177-187.
    4. Irandoust, Manuchehr, 2019. "On the relation between exchange rates and tourism demand: A nonlinear and asymmetric analysis," The Journal of Economic Asymmetries, Elsevier, vol. 20(C).
    5. Cem IŞIK & Magdalena RADULESCU & Aleksandra FEDAJEV, 2019. "The effects of exchange rate depreciations and appreciations on the tourism trade balance: the case of Spain," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 10, pages 221-237, June.
    6. Çetin, Murat & Sarıgül, Sevgi Sümerli & Işık, Cem & Avcı, Pınar & Ahmad, Munir & Alvarado, Rafael, 2023. "The impact of natural resources, economic growth, savings, and current account balance on financial sector development: Theory and empirical evidence," Resources Policy, Elsevier, vol. 81(C).
    7. Serdan Ongar & Dilek Ozdemir & Cem Isik, 2018. "Testing the J-Curve Hypothesis for the USA: Applications of the Nonlinear and Linear ARDL Models," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 16(1), pages 21-34.
    8. Ahmed Shoukry Rashad, 2022. "The Power of Travel Search Data in Forecasting the Tourism Demand in Dubai," Forecasting, MDPI, vol. 4(3), pages 1-11, July.

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