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Modeling tourism: A fully identified VECM approach

  • Bonham, Carl
  • Gangnes, Byron
  • Zhou, Ting

System-based cointegration methods have become popular tools for economic analysis and forecasting. However, the identification of structural relationships is often problematic. Using a theory-directed sequential reduction method suggested by Hall, Henry and Greenslade [Hall, S. G., Henry, S., & Greenslade, J. (2002). On the identification of cointegrated systems in small samples: A modelling strategy with an application to UK wages and prices. Journal of Economic Dynamics and Control, 26, 1517-1537], we estimate a vector error correction model of Hawaii tourism, where both demand and supply-side influences are important. We identify reasonable long-run equilibrium relationships, and Diebold-Mariano tests for forecast accuracy demonstrate satisfactory forecasting performance.

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Article provided by Elsevier in its journal International Journal of Forecasting.

Volume (Year): 25 (2009)
Issue (Month): 3 (July)
Pages: 531-549

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Handle: RePEc:eee:intfor:v:25:y:2009:i:3:p:531-549
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