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The US Tourism Trade Balance and Exchange Rate Shock

Author

Listed:
  • Ka Ming Cheng
  • Hyeongwoo Kim
  • Henry Thompson

Abstract

This paper investigates the effect of dollar depreciation on the US tourism trade balance. Export revenue and import spending functions are estimated separately with structural vector autoregressive methods to better capture dynamic adjustments to exchange rate shocks. Quarterly data cover the period of floating exchange rates from 1973 through 2007. Depreciation has no significant effect on tourism export revenue or import spending. US tourists are more sensitive to income than are tourists coming to the US.

Suggested Citation

  • Ka Ming Cheng & Hyeongwoo Kim & Henry Thompson, 2011. "The US Tourism Trade Balance and Exchange Rate Shock," Auburn Economics Working Paper Series auwp2011-12, Department of Economics, Auburn University.
  • Handle: RePEc:abn:wpaper:auwp2011-12
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    File URL: http://cla.auburn.edu/econwp/Archives/2011/2011-12.pdf
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    References listed on IDEAS

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    1. repec:ebl:ecbull:v:6:y:2007:i:26:p:1-12 is not listed on IDEAS
    2. Demirden, Tuvana & Pastine, Ivan, 1995. "Flexible exchange rates and the J-curve: An alternative approach," Economics Letters, Elsevier, vol. 48(3-4), pages 373-377, June.
    3. Harris, R. I. D., 1992. "Testing for unit roots using the augmented Dickey-Fuller test : Some issues relating to the size, power and the lag structure of the test," Economics Letters, Elsevier, vol. 38(4), pages 381-386, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Balance of Trade; Exchange Rate; Tourism; Structural Vector Autoregressive Model; J-Curve;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F10 - International Economics - - Trade - - - General

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