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Testing Alternative Dynamic Systems for Modelling Tourism Demand

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Author Info

  • Maria M. De Mello

    ()
    (CETE, Faculdade de Economia, Universidade do Porto)

  • Natércia Fortuna

    ()
    (CEMPRE, Faculdade de Economia, Universidade do Porto)

Abstract

The goals in this paper are to contribute an empirical study of tourism demand dynamics, and to point out areas where the scrutiny of relationships between theoretical and empirical considerations are likely to produce new insights in this area of research. A flexible general form of a Dynamic Almost Ideal Demand System (DAIDS) is derived to analyse the UK tourism demand for its geographically proximate neighbours Portugal, Spain and France, in the period 1969-1997. Nested within the general dynamic structure are Deaton and Muellbauer’s static AIDS model itself, the partial adjustment model and the auto-regressive distributed lag model, which are tested against the general dynamic alternative. The empirical results obtained show that DAIDS is a data coherent and theoretically consistent model, providing evidence of the robustness of this methodology to conduct tourism demand analysis in a temporal context. Moreover, the dynamic model offers statistically strong evidence on the inadequacy of the orthodox static AIDS and the other restricted models to reconcile consistently data and theory within their formulations. Estimates for tourism price and expenditure elasticities are obtained, permitting a comparative analysis of the relative magnitudes and statistical relevance of long and short run sensitivity of the UK tourism demand to changes in its determinants.

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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series CEF.UP Working Papers with number 0501.

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Length: 16 pages
Date of creation: Feb 2005
Date of revision:
Handle: RePEc:por:cetedp:0501

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Keywords: Tourism Demand; dynamic almost ideal system; partial adjustment system; autoregressive distributed lag system.;

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References

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  1. Panayiota Lyssiotou, 2000. "Dynamic analysis of British demand for tourism abroad," Empirical Economics, Springer, vol. 25(3), pages 421-436.
  2. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  3. Banerjee, A & Hendry, D-F & Mizon, G-E, 1996. "The Econometric Analysis of Economic Policy," Economics Working Papers eco96/34, European University Institute.
  4. Anderson, Gordon & Blundell, Richard, 1984. "Consumer Non-Durables in the U.K. A Dynamic Demand System," Economic Journal, Royal Economic Society, vol. 94(376a), pages 35-44, Supplemen.
  5. Anderson, Gordon & Blundell, Richard, 1983. "Testing Restrictions in a Flexible Dynamic Demand System: An Application to Consumers' Expenditure in Canada," Review of Economic Studies, Wiley Blackwell, vol. 50(3), pages 397-410, July.
  6. Maria De Mello & Alan Pack & M. Thea Sinclair, 2002. "A system of equations model of UK tourism demand in neighbouring countries," Applied Economics, Taylor & Francis Journals, vol. 34(4), pages 509-521.
  7. Maria De Mello & Kevin Nell, 2005. "The forecasting ability of a cointegrated VAR system of the UK tourism demand for France, Spain and Portugal," Empirical Economics, Springer, vol. 30(2), pages 277-308, 09.
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Cited by:
  1. Farai Jena & Barry Reilly, 2013. "The determinants of United Kingdom student visa demand from developing countries," IZA Journal of Labor & Development, Springer, vol. 2(1), pages 1-22, December.
  2. Bonham, Carl & Gangnes, Byron & Zhou, Ting, 2009. "Modeling tourism: A fully identified VECM approach," International Journal of Forecasting, Elsevier, vol. 25(3), pages 531-549, July.

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