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Thailand’s International Tourism Demand: The ARDL Approach to Cointegration

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Author Info

  • Prasert Chaitip

    (Chiang Mai University, Thailand)

  • Chukiat Chaiboonsri

    (Bangalore University, India)

Abstract

This paper sought to find the short-run and long-run relationships between international tourist arrivals in Thailand and economic variables such as GDP, the price of goods and services, transportation costs, temperature of Thailand and both the exchange rate and exchange rate risk for the period from 1997(Q1)-2005(Q2). The cointegration techniques used were based on the ARDL approach to cointegration (developed by Pesaran and Pesaran (1997), Pesaran and Smith (1999) and Pesaran et al. (2001)) of Thailand’s international tourism demand and error correction mechanisms were used to find the short-run relationships of Thailand’s international tourism demand. This paper used the full six standard method test for unit root tests such as ADF-Test (1979), PP-Test (1997,1999), KPSS-Test (1992), DF-GLS Test (1996), the ERS Point Optimal Test and Ng and Perron (2001). The full six standard method test for unit root test have not previously been used to test unit roots for estimating tourism demand models based on ARDL approach to cointegration as well as this method for analyzing the long-run relations when the variables are of mixed-order of integration, i.e., I(0) and I(1). The long-run results indicate that growth in income (GDP) of Thailand’s major tourist source markets has a positive impact on international visitor arrivals to Thailand while transportation cost and both exchange rate and exchange rate risk have a negative impact on international visitor arrivals to Thailand. The findings were consistent with economic theory and the implications of the model can be used for policy making. Finally, the temperature of Thailand mostly has a negative impact on international visitor arrivals to Thailand.

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File URL: http://upet.ro/annals/economics/pdf/2009/20090316.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): 9 (2009)
Issue (Month): 3 ()
Pages: 163-184

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Handle: RePEc:pet:annals:v:9:i:3:y:2009:p:163-184

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

Related research

Keywords: Thailand; Mixed order of Integration; ARDL approach; cointegration; International tourism demand;

References

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  1. Shrestha, Min B. & Chowdhury, Khorshed, 2005. "Sequential Procedure for Testing Unit Roots in the Presence of Structural Break in Time Series Data," Economics Working Papers wp05-06, School of Economics, University of Wollongong, NSW, Australia.
  2. Jeroen J.M. Kremers & Neil R. Ericsson & Juan J. Dolado, 1992. "The power of cointegration tests," International Finance Discussion Papers 431, Board of Governors of the Federal Reserve System (U.S.).
  3. B Ouattara, 2004. "Modelling the Long Run Determinants of Private Investment in Senegal," The School of Economics Discussion Paper Series 0413, Economics, The University of Manchester.
  4. 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.
  5. Julide Yildirim & Selami Sezgin, 2003. "Military expenditure and employment in Turkey," Defence and Peace Economics, Taylor & Francis Journals, vol. 14(2), pages 129-139.
  6. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
  7. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
  8. Ian Babetskii & Balázs Égert, 2005. "Equilibrium Exchange Rate in the Czech Republic: How Good is the Czech BEER?," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 55(5-6), pages 232-252, May.
  9. KIHANGIRE Asiimwe David & MUGYENYI Albert, 2005. "Is Inflation Always And Everywhere A Non-Monetary Phenomenon: Evidence From Uganda," International Finance 0508011, EconWPA.
  10. Paresh Narayan & Russell Smyth & Mohan Nandha, 2004. "Interdependence and dynamic linkages between the emerging stock markets of South Asia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 44(3), pages 419-439.
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Citations

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Cited by:
  1. repec:rom:campco:v:9:y:2013:i:1:p:220-234 is not listed on IDEAS
  2. 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.
  3. Chukiat Chaiboonsri & Prasert Chaitip & N. Rangaswamy, 2008. "A Panel Unit Root and Panel Cointegration Test of the Modeling International Tourism Demand in India," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 8(1), pages 95-124.

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