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Peering Through the Fog of Uncertainty: Out-of-Sample Forecasts of Post-Pandemic Tourism

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  • Mr. Serhan Cevik

Abstract

This paper uses an augmented gravity model framework to investigate the historical impact of infectious diseases on international tourism and develops an out-of-sample prediction model. Using bilateral tourism flows among 38,184 pairs of countries during the period 1995–2017, I compare the forecasting performance of alternative specifications and estimation methods. These computations confirm the statistical and economic significance of infectious-disease episodes in forecasting international tourism flows. Including infectious diseases in the model improves forecast accuracy by an average of 4.5 percent and as much as 7 percent relative to the standard gravity model. The magnitude of these effects, however, is likely to be much greater in the case of COVID-19, which is a highly contagious virus that has spread fast throughout populations across the world.

Suggested Citation

  • Mr. Serhan Cevik, 2023. "Peering Through the Fog of Uncertainty: Out-of-Sample Forecasts of Post-Pandemic Tourism," IMF Working Papers 2023/070, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2023/070
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    Keywords

    Infectious diseases; tourism flows; gravity model; predictability; out-of-sample forecasting; out-of-sample prediction model; forecasting performance; tourism flow; infectious-disease episode; Tourism; Gravity models; Communicable diseases;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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