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Analysis of Tourist Flow from the US to Taiwan

Author

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  • Yen-Hsun Chen

    (Department of Business Administration, National Cheng Kung University, No. 1, University Road, Tainan City 701, Taiwan, R.O.C.
    Department of Leisure and Sports Management, Far East University, No. 49, Zhonghua Rd., Xinshi Dist., Tainan City 74448, Taiwan, R.O.C.)

  • Hsin-Hong Kang

    (Department of Business Administration, National Cheng Kung University, No. 1, University Road, Tainan City 701, Taiwan, R.O.C.)

Abstract

It is important for Taiwanese policy makers to understand how economic factors affect US tourists’ decision to travel to Taiwan. For the long-run analysis, Johansen’s cointegration test reveals that three cointegration vectors exist among the model variables, indicating a long-run relationship. To conduct a short-run analysis, this paper employs vector auto regression (VAR) to estimate the responses of US tourists in Taiwan to the shocks of changes to personal disposable income, cost of living, and substitute price. The short-run equilibrium adjustment processes are discussed in terms of generalized impulse response. The results show an immediate and significant response of changes in tourist arrivals to their own impacts, changes in the cost of living, and changes in the substitute price. In addition, the price, income, and cross-elasticity of tourism demand are all positive at the beginning of the responses, implying that the tourism products can be attributed to normal and substitute goods.

Suggested Citation

  • Yen-Hsun Chen & Hsin-Hong Kang, 2015. "Analysis of Tourist Flow from the US to Taiwan," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 65(supplemen), pages 369-384, December.
    • Handle: RePEc:aka:aoecon:v:65:y:2015:i:supplement2:p:369-384
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