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Travel Shocks to the Chinese Economy: A Fractional Integration Approach

Author

Listed:
  • Guglielmo Maria Caporale
  • Gloria Claudio-Quiroga
  • Luis A. Gil-Alana
  • Andoni Maiza-Larrarte

Abstract

This paper examines the degree of persistence of China’s travel “credit” and “debt” series in the balance of payments. This is an important issue because the travel component in the balance of payments of travel is one of the main indicators measuring the contribution of tourism to a country’s economic activity, and knowledge of its persistence is critical to assess the potential impact of disrupting factors such as the COVID-19 pandemic. The analysis is carried out using a fractional integration framework, which provides evidence of mean reversion in the credit series, but not in the debt series. The policy implications of these findings are also discussed.

Suggested Citation

  • Guglielmo Maria Caporale & Gloria Claudio-Quiroga & Luis A. Gil-Alana & Andoni Maiza-Larrarte, 2025. "Travel Shocks to the Chinese Economy: A Fractional Integration Approach," CESifo Working Paper Series 12142, CESifo.
    • Handle: RePEc:ces:ceswps:_12142
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    References listed on IDEAS

    as
    1. Ali Gokhan Yucel & Cihat Koksal & Sevil Acar & Luis Alberiko Gil-Alana, 2022. "The impact of COVID-19 on Turkey’s tourism sector: fresh evidence from the fractional integration approach," Applied Economics, Taylor & Francis Journals, vol. 54(27), pages 3074-3087, June.
    2. Granger, Clive W. J. & Hyung, Namwon, 2004. "Occasional structural breaks and long memory with an application to the S&P 500 absolute stock returns," Journal of Empirical Finance, Elsevier, vol. 11(3), pages 399-421, June.
    3. Diebold, Francis X. & Inoue, Atsushi, 2001. "Long memory and regime switching," Journal of Econometrics, Elsevier, vol. 105(1), pages 131-159, November.
    4. Ana Maria Santacreu, 2016. "The Rise in Chinese Tourism and Its Effects on the Balance of Payments," Economic Synopses, Federal Reserve Bank of St. Louis, issue 26, pages 1-2.
    5. J. Cunado & L.A. Gil-Alana & F. P Erez de Gracia, 2008. "Fractional Integration and Structural Breaks: Evidence from International Monthly Arrivals in the USA," Tourism Economics, , vol. 14(1), pages 13-23, March.
    6. Luis A. Gil-Alana & Andrea Mervar & James E. Payne, 2016. "Modeling the degree of persistence in Croatian tourism," Tourism Economics, , vol. 22(3), pages 655-664, June.
    7. Wu, Jyh-Lin, 2000. "Mean reversion of the current account: evidence from the panel data unit-root test," Economics Letters, Elsevier, vol. 66(2), pages 215-222, February.
    8. James E Payne & Luis A Gil-Alana, 2018. "Data measurement and the change in persistence of tourist arrivals to the United States in the aftermath of the September 11th terrorist attacks," Tourism Economics, , vol. 24(1), pages 41-50, February.
    9. Jyh-lin, Wu & Fountas, Stilianos & Show-lin, Chen, 1996. "Testing for the sustainability of the current account deficit in two industrial countries," Economics Letters, Elsevier, vol. 52(2), pages 193-198, August.
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    Keywords

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    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Z30 - Other Special Topics - - Tourism Economics - - - General

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