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Asian Financial Crisis, Avian Flu And Terrorist Threats: Are Shocks To Malaysian Tourist Arrivals Permanent Or Transitory?

  • Hooi Hooi Lean
  • Russell Smyth

International visitor arrivals from Malaysia's ten major source markets are examined using Lagrange Multiplier (LM) unit root tests with one and two structural breaks to ascertain if shocks to the time path of tourist arrivals are permanent or transitory. The LM unit root test with one break is able to reject the unit root null for between 60 per cent of source markets where the break is specified as in the intercept and 90 per cent of source markets where the break is specified as in the intercept and slope. The LM unit root test with two breaks is able to reject the unit root null for all source markets, irrespective of how the break is specified. This result suggests that the effects of shocks on the growth path of tourist arrivals to Malaysia from its major markets are only transitory and that Malaysia's tourist sector is sustainable in the long run. While the effects of shocks are not permanent we do find that following shocks the growth in tourist arrivals from Malaysia's source markets have generally slowed. This result suggests there is a need to reduce the negative effects of slower growth in the recovery phase.

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File URL: http://www.buseco.monash.edu.au/eco/research/papers/2006/1106malaysia.pdf
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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 11/06.

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Length: 26 pages
Date of creation: 02 Jun 2006
Date of revision:
Handle: RePEc:mos:moswps:2006-11
Contact details of provider: Postal: Department of Economics, Monash University, Victoria 3800, Australia
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Web page: http://www.buseco.monash.edu.au/eco/
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  1. Vogelsang, Timothy J., 1997. "Wald-Type Tests for Detecting Breaks in the Trend Function of a Dynamic Time Series," Econometric Theory, Cambridge University Press, vol. 13(06), pages 818-848, December.
  2. Robin L. Lumsdaine & David H. Papell, 1997. "Multiple Trend Breaks And The Unit-Root Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 212-218, May.
  3. Peggy Teo, 2003. "Limits of imagineering: a case study of Penang," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 27(3), pages 545-563, 09.
  4. Junsoo Lee & Mark C. Strazicich, 2004. "Minimum LM Unit Root Test with One Structural Break," Working Papers 04-17, Department of Economics, Appalachian State University.
  5. Hall, Alastair R, 1994. "Testing for a Unit Root in Time Series with Pretest Data-Based Model Selection," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(4), pages 461-70, October.
  6. Russell Smyth & Ingrid Nielsen & Vinod Mishra, 2009. "'I've been to Bali too' (and I will be going back): are terrorist shocks to Bali's tourist arrivals permanent or transitory?," Applied Economics, Taylor & Francis Journals, vol. 41(11), pages 1367-1378.
  7. Paresh Kumar Narayan, 2005. "The structure of tourist expenditure in Fiji: evidence from unit root structural break tests," Applied Economics, Taylor & Francis Journals, vol. 37(10), pages 1157-1161.
  8. Narayan, Paresh Kumar, 2008. "Examining the behaviour of visitor arrivals to Australia from 28 different countries," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(5), pages 751-761, June.
  9. Mita Bhattacharya & Paresh Kumar Narayan, 2005. "Testing for the random walk hypothesis in the case of visitor arrivals: evidence from Indian tourism," Applied Economics, Taylor & Francis Journals, vol. 37(13), pages 1485-1490.
  10. Junsoo Lee & Mark C. Strazicich, 2003. "Minimum Lagrange Multiplier Unit Root Test with Two Structural Breaks," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1082-1089, November.
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