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An empirical analysis of the influence of macroeconomic determinants on World tourism demand

Author

Listed:
  • Martins, Luís Filipe
  • Gan, Yi
  • Ferreira-Lopes, Alexandra

Abstract

This paper considers three econometric models to determine the relationship between macroeconomic variables and tourism demand. Tourism demand is measured by the inbound visitor's population and also by on-the-ground expenditures. The database is an unbalanced panel of 218 countries over the period 1995–2012. There is evidence that an increase in the World's GDP per capita, a depreciation of the national currency, and a decline of relative domestic prices do help boost tourism demand. The World's GDP per capita is more important when explaining arrivals, but relative prices become more important when we use expenditures as the proxy for tourism demand. We cannot reject the hypothesis of a relative prices unitary elasticity of expenditures. Additionally, we have partitioned our data by income level and by Continent. Results are robust in the first partition, but less robust in the second, although the main conclusions still hold. Finally, we draw policy implications from our findings.

Suggested Citation

  • Martins, Luís Filipe & Gan, Yi & Ferreira-Lopes, Alexandra, 2017. "An empirical analysis of the influence of macroeconomic determinants on World tourism demand," Tourism Management, Elsevier, vol. 61(C), pages 248-260.
  • Handle: RePEc:eee:touman:v:61:y:2017:i:c:p:248-260
    DOI: 10.1016/j.tourman.2017.01.008
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    File URL: http://www.sciencedirect.com/science/article/pii/S0261517717300110
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    References listed on IDEAS

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    More about this item

    Keywords

    Tourism demand; Exchange rate; Relative domestic prices; World income; Panel data model; Poisson panel data model;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z30 - Other Special Topics - - Tourism Economics - - - General

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