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An Error Correction Analysis of Visitor Arrivals to the Bahamas

Author

Listed:
  • Charles, Jacky S.
  • Fullerton, Thomas M., Jr.

Abstract

Tourism is the major domestic export for many countries in the Caribbean region. Given this, the variables which influence tourism demand in this region, as well as accurate forecasts, can assist policy makers in their planning efforts and growth strategies. This study utilizes error correction models (ECMs) to analyze tourism demand in the Bahamas. Findings suggest that income and habit persistence/word of mouth advertising are the primary determinants of tourism demand in the Bahamas, while the cost of travel is generally insignificant. To further assess model reliability, forecasts of the ECMs are compared to random walk and random walk with drift benchmarks. The study finds that while the ECMs provide fairly reliable forecasts, their performances are not superior to those provided by random walk benchmarks.

Suggested Citation

  • Charles, Jacky S. & Fullerton, Thomas M., Jr., 2012. "An Error Correction Analysis of Visitor Arrivals to the Bahamas," MPRA Paper 43064, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43064
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    File URL: https://mpra.ub.uni-muenchen.de/43064/1/MPRA_paper_43064.pdf
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    References listed on IDEAS

    as
    1. Marcycruz de Leon & Thomas M Fullerton Jr & Brian W Kelly, 2009. "Tolls, Exchange Rates, And Borderplex International Bridge Traffic," Articles, International Journal of Transport Economics, vol. 36(2).
    2. Phillips, P.C.B., 1986. "Understanding spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 33(3), pages 311-340, December.
    3. Granger, C. W. J., 1981. "Some properties of time series data and their use in econometric model specification," Journal of Econometrics, Elsevier, vol. 16(1), pages 121-130, May.
    4. Kulendran, N. & King, Maxwell L., 1997. "Forecasting international quarterly tourist flows using error-correction and time-series models," International Journal of Forecasting, Elsevier, vol. 13(3), pages 319-327, September.
    5. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
    6. Song, Haiyan & Witt, Stephen F. & Jensen, Thomas C., 2003. "Tourism forecasting: accuracy of alternative econometric models," International Journal of Forecasting, Elsevier, vol. 19(1), pages 123-141.
    7. Thomas M Fullerton Jr, 2005. "Borderplex Bridge and Air Econometric Forecast Accuracy," Urban/Regional 0501005, EconWPA.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Tourism; Error Correction Analysis; Forecasts; Bahamas;

    JEL classification:

    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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