Domestic tourism demand in Italy: a Fixed Effect Vector Decomposition estimation
AbstractThis study investigates the main determinants of the Italian domestic tourism demand measured in terms of regional bilateral tourism flows. We consider a large panel of explanatory variables meant to capture not only the role of traditional economic demand-driven forces, but also qualitative supply-side factors that can be crucial in determining the comparative advantage of the exporting regions. The empirical analysis, performed in the context of an extended gravity model, builds on the Fixed Effect Vector Decomposition estimator (FEVD) developed by Plümper and Troeger (2007). The investigation is conducted for the country as a whole and separately for the two macro-areas, namely the Centre-North and the South. According to our results, at aggregate level, the main determinants of Italian tourism flows appear to be the lagged dependent variable, which control for reputation and habit formation, and relative prices. Also the per capita GDP plays a significant role, but its coefficient suggests that in Italy domestic tourism does not behave as a luxury good, as frequently found in the international tourism context. Another interesting result is that for Italian tourists, domestic destinations and international destinations act as substitutable goods. At sub-sample level two main findings are worth noting. On the one hand, the main outcomes of the full sample analysis are confirmed, on the other hand some interesting differences arise with respect to the impact of the relevant variables. In particular, tourists coming from the southern regions appear to be more concerned than northern ones about variations in their per capita GDP and in price differences.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 26073.
Date of creation: Jul 2010
Date of revision:
Domestic tourism flows; Gravity model; Fixed Effect Vector Decomposition;
Find related papers by JEL classification:
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Recreation; Tourism
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
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- Naudé, Wim & Saayman, Andrea, 2005. "Determinants of tourist arrivals in Africa: a panel data regression analysis," MPRA Paper 16479, University Library of Munich, Germany.
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