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What Attracts Tourists to Paradise?

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  • Evridiki Tsounta

Abstract

This paper investigates the determinants of tourism demand in the Eastern Caribbean Currency Union. We estimate the demand function in a panel setting using annual data from 1979 to 2005. Results show that tourism arrivals are significantly affected by economic developments in the source countries, while price considerations and external shocks (such as hurricanes and wars) are also important. Supply factors, such as developments in foreign direct investment and the number of airlines servicing a destination, are also found to be significant determinants of tourism demand.

Suggested Citation

  • Evridiki Tsounta, 2008. "What Attracts Tourists to Paradise?," IMF Working Papers 08/277, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:08/277
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    References listed on IDEAS

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    1. Lisa C. Chase & David R. Lee & William D. Schulze & Deborah J. Anderson, 1998. "Ecotourism Demand and Differential Pricing of National Park Access in Costa Rica," Land Economics, University of Wisconsin Press, vol. 74(4), pages 466-482.
    2. Paul Cashin, 2004. "Caribbean Business Cycles," IMF Working Papers 04/136, International Monetary Fund.
    3. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 99-125.
    4. Jingqing Chai & Rishi Goyal, 2008. "Tax Concessions and Foreign Direct Investment in the Eastern Caribbean Currency Union," IMF Working Papers 08/257, International Monetary Fund.
    5. Witt, Stephen F. & Witt, Christine A., 1995. "Forecasting tourism demand: A review of empirical research," International Journal of Forecasting, Elsevier, vol. 11(3), pages 447-475, September.
    6. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    7. Masih, Abul M. M. & Masih, Rumi, 1996. "Empirical tests to discern the dynamic causal chain in macroeconomic activity: new evidence from Thailand and Malaysia based on a multivariate cointegration/vector error-correction modeling approach," Journal of Policy Modeling, Elsevier, vol. 18(5), pages 531-560, October.
    8. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    9. Gonzalez, Pilar & Moral, Paz, 1995. "An analysis of the international tourism demand in Spain," International Journal of Forecasting, Elsevier, vol. 11(2), pages 233-251, June.
    10. Rafael Romeu, 2008. "Vacation Over; Implications for the Caribbean of Opening U.S.-Cuba Tourism," IMF Working Papers 08/162, International Monetary Fund.
    11. Paul Cashin & Antonio Lemus, 2012. "The Eastern Caribbean Currency Union; Would a Fiscal Insurance Mechanism Mitigate National Income Shocks?," IMF Working Papers 12/17, International Monetary Fund.
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    Cited by:

    1. Sebastian Acevedo Mejia & Lu Han & Marie S Kim & Nicole Laframboise, 2016. "Flying to Paradise; The Role of Airlift in the Caribbean Tourism Industry," IMF Working Papers 16/33, International Monetary Fund.
    2. Nicole Laframboise & Nkunde Mwase & Joonkyu Park & Yingke Zhou, 2014. "Revisiting Tourism Flows to the Caribbean; What is Driving Arrivals?," IMF Working Papers 14/229, International Monetary Fund.

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