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A Panel Unit Root and Panel Cointegration Test of the Modeling International Tourism Demand in India

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Author Info

  • Chukiat Chaiboonsri

    (Bangalore University, India)

  • Prasert Chaitip

    (Chiang Mai University, Thailand)

  • N. Rangaswamy

    (Bangalore University, India)

Abstract

This paper sought to find the long-run relationships between international tourist arrivals in India with economic variables such as GDP, transportation costs and the exchange rate for the period from 2002-2006. The cointegration techniques used was based on Panel Cointegration Test as well as both the OLS estimator and DOLS estimator were used to find long-run relationship of the international tourism demand model for India. This paper used the five standard method test for Panel Unit Root Tests such as Levin, Lin and Chu (2002), Breitung (2000), Im, Pesaran and Shin (2003), Maddala and Wu (1999) and Choi (2001) and Handri (1999). The long-run results indicate that growth in income (GDP) of India’s major tourist source markets has a positive impact on international visitor arrivals to India. These empirical results imply that when GDP of international major tourist source market such as England, America, Canada, France, German, Japan, Malaysia, Australia, Singapore and Korea increasing 1% then the number of international visitor arrivals to India increasing about 3% to 4%. As well as when transportation cost of these country increasing 1% then the number of international visitor arrivals to India increasing about 0.3% to 0.6%. Finally when the value of India’s currency strong than the value of these country’s currency increasing 1% then the number of international visitor arrivals to India decreasing 0.003% to 0.006%. Furthermore mostly findings were consistent with economic theory and the implications of the model can be use for policy making

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File URL: http://www.upet.ro/annals/pdf/Annals-2008-Part1.pdf
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Bibliographic Info

Article provided by University of Petrosani, Romania in its journal Annals of the University of Petrosani - Economics.

Volume (Year): 8 (2008)
Issue (Month): 1 ()
Pages: 95-124

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Handle: RePEc:pet:annals:v:8:i:1:y:2008:p:95-124

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Web page: http://www.upet.ro/

Related research

Keywords: India; tourism demand; Panel Unit Root Test; Panel Cointergration Test; Long-run relationship;

References

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  1. Pesaran, H. Hashem & Shin, Yongcheol, 1998. "Generalized impulse response analysis in linear multivariate models," Economics Letters, Elsevier, vol. 58(1), pages 17-29, January.
  2. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
  3. Kaddour Hadri, 1999. "Testing For Stationarity In Heterogeneous Panel Data," Research Papers 1999_04, University of Liverpool Management School.
  4. Roberto Basile & Mauro Costantini & Sergio Destefanis, 2005. "Unit root and cointegration tests for cross-sectionally correlated panels. Estimating regional production functions," CELPE Discussion Papers 94, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
  5. Suzanne McCoskey & Chihwa Kao, 1998. "A residual-based test of the null of cointegration in panel data," Econometric Reviews, Taylor & Francis Journals, vol. 17(1), pages 57-84.
  6. Teresa Garin-Munoz & Teodosio Perez Amaral, 2000. "An econometric model for international tourism flows to Spain," Applied Economics Letters, Taylor & Francis Journals, vol. 7(8), pages 525-529.
  7. Yum K. Kwan, 2006. "The Direct Substitution Between Government and Private Consumption in East Asia," NBER Working Papers 12431, National Bureau of Economic Research, Inc.
  8. Christine Lim & Michael McAleer, 2001. "Modelling the Determinants of International Tourism Demand to Australia," ISER Discussion Paper 0532, Institute of Social and Economic Research, Osaka University.
  9. Kaddour Hadri, 1999. "Testing The Null Hypothesis Of Stationarity Against The Alternative Of A Unit Root In Panel Data With Serially Correlated Errors," Research Papers 1999_05, University of Liverpool Management School.
  10. Miguel Ramirez, 2007. "A Panel Unit Root and Panel Cointegration Test of the Complementarity Hypothesis in the Mexican Case: 1960–2001," Atlantic Economic Journal, International Atlantic Economic Society, vol. 35(3), pages 343-356, September.
  11. Peter Pedroni, 2001. "Purchasing Power Parity Tests In Cointegrated Panels," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 727-731, November.
  12. Virginie Coudert & Cécile Couharde, 2005. "Real Equilibrium Exchange Rate in China," Working Papers 2005-01, CEPII research center.
  13. Christine Lim & Michael McAleer, 2000. "A seasonal analysis of Asian tourist arrivals to Australia," Applied Economics, Taylor & Francis Journals, vol. 32(4), pages 499-509.
  14. Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
  15. repec:wop:humbsf:2002-3 is not listed on IDEAS
  16. Prasert Chaitip & Chukiat Chaiboonsri, 2009. "Thailand’s International Tourism Demand: The ARDL Approach to Cointegration," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 9(3), pages 163-184.
  17. Jörg Breitung, 2002. "A parametric approach to the estimation of cointegration vectors in panel data," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 B5-4, International Conferences on Panel Data.
  18. Banerjee, Anindya, 1999. " Panel Data Unit Roots and Cointegration: An Overview," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 607-29, Special I.
  19. William Maloney & Gabriel V. Montes Rojas, 2005. "How elastic are sea, sand and sun? Dynamic panel estimates of the demand for tourism," Applied Economics Letters, Taylor & Francis Journals, vol. 12(5), pages 277-280.
  20. Christine Lim & Michael McAleer, 2003. "Modelling International Travel Demand from Singapore to Australia," CIRJE F-Series CIRJE-F-214, CIRJE, Faculty of Economics, University of Tokyo.
  21. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
  22. Chukiat Chaiboonsri & Prasert Chaitip & N. Rangaswamy, 2009. "Modelling International Tourism Demand in Thailand," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 9(3), pages 125-146.
  23. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-70, Special I.
  24. Naudé, Wim & Saayman, Andrea, 2005. "Determinants of tourist arrivals in Africa: a panel data regression analysis," MPRA Paper 16479, University Library of Munich, Germany.
  25. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
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Citations

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Cited by:
  1. Prasert Chaitip & Chukiat Chaiboonsri, 2009. "A Panel Cointegration Analysis: Thailand’s International Tourism Demand Model," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 9(1), pages 129-142.
  2. Bouzahzah, Mohamed & El Menyari, Younesse, 2012. "Les déterminants de la demande touristique: le cas du Maroc
    [Determinants of tourism demand: the case of Morocco]
    ," MPRA Paper 39029, University Library of Munich, Germany, revised 25 May 2012.

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