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Modelling Country Risk and Uncertainty in Small Island Tourism Economies

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  • Suhejla Hoti
  • Michael McAleer
  • Riaz Shareef

Abstract

Small island tourism economies (SITEs) differ significantly from each other in many respects, such as their size, location, political systems, historical experience, economic prospects, ecological fragility, and vulnerability to ethnic conflicts, crime and the threat of global terrorism. Given these differences, a careful analysis of country risk (or uncertainty) and its components for SITEs is of substantial interest to private tourism operators and foreign direct investors in the tourism and hospitality industry, tourism commissions and governments. This paper provides a comparison of country risk ratings, risk returns and their associated volatilities (or uncertainty) for six SITEs for which monthly data compiled by the International Country Risk Guide are available. Monthly economic, financial, political and composite country risk returns are used to estimate univariate symmetric and asymmetric models of uncertainty. The empirical results provide a comparative assessment of the country risk returns and uncertainty for the six SITEs.

Suggested Citation

  • Suhejla Hoti & Michael McAleer & Riaz Shareef, 2005. "Modelling Country Risk and Uncertainty in Small Island Tourism Economies," Tourism Economics, , vol. 11(2), pages 159-183, June.
    • Handle: RePEc:sae:toueco:v:11:y:2005:i:2:p:159-183
    DOI: 10.5367/0000000054183504
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    References listed on IDEAS

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    Cited by:

    1. Chia-Lin Chang & Michael Mcaleer, 2012. "Aggregation, Heterogeneous Autoregression And Volatility Of Daily International Tourist Arrivals And Exchange Rates," The Japanese Economic Review, Japanese Economic Association, vol. 63(3), pages 397-419, September.
    2. Chia-Lin Chang & Michael Mcaleer, 2009. "Daily Tourist Arrivals, Exchange Rates and Voatility for Korea and Taiwan," Korean Economic Review, Korean Economic Association, vol. 25, pages 241-267.
    3. Chia-Lin Chang & Michael McAleer & Dan Slottje, 2009. "Modelling International Tourist Arrivals and Volatility: An Application to Taiwan," Documentos de Trabajo del ICAE 2009-06, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    4. Divino, Jose Angelo & McAleer, Michael, 2010. "Modelling and forecasting daily international mass tourism to Peru," Tourism Management, Elsevier, vol. 31(6), pages 846-854.
    5. Jose Angelo Divino & Michael McAleer, 2009. "Modelling the Growth and Volatility in Daily International Mass Tourism to Peru," Documentos de Trabajo del ICAE 2009-15, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    6. Edson VENGESAI & Adefemi A. OBALADE & Paul-Francois MUZINDUTSI, 2021. "Country Risk Dynamics and Stock Market Volatility: Evidence from the JSE Cross-Sector Analysis," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 5(2), pages 63-84.
    7. Michael McAleer, 2015. "The Fundamental Equation in Tourism Finance," JRFM, MDPI, vol. 8(4), pages 1-6, December.
    8. Oliver Cruz-Milan & Sergio Lagunas-Puls, 2021. "Effects of COVID-19 on Variations of Taxpayers in Tourism-Reliant Regions: The Case of the Mexican Caribbean," JRFM, MDPI, vol. 14(12), pages 1-23, December.
    9. Jorge V Pérez-Rodríguez & María Santana-Gallego, 2020. "Modelling tourism receipts and associated risks, using long-range dependence models," Tourism Economics, , vol. 26(1), pages 70-96, February.
    10. Shareef, Riaz & McAleer, Michael, 2008. "Modelling international tourism demand and uncertainty in Maldives and Seychelles: A portfolio approach," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 78(2), pages 459-468.

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