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The Fundamental Equation in Tourism Finance

Author

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  • Michael McAleer

    (National Tsing Hua University, Taiwan; Erasmus University Rotterdam, the Netherlands; Complutense University of Madrid, Spain)

Abstract

The purpose of the paper is to present the fundamental equation in tourism finance that connects tourism research to empirical finance and financial econometrics. The energy industry, which includes, oil, gas and bio-energy fuels, together with the tourism industry, are two of the most important industries in the world today in terms of employment and generating income. The primary purpose in attracting domestic and international tourists to a country, region or city is to maximize tourism expenditure. The paper will concentrate on daily tourism expenditure, regardless of whether such data might be readily available. If such data are not available, a practical method is presented to calculate the appropriate data.

Suggested Citation

  • Michael McAleer, 2015. "The Fundamental Equation in Tourism Finance," Tinbergen Institute Discussion Papers 15-129/III, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20150129
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    File URL: http://papers.tinbergen.nl/15129.pdf
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    References listed on IDEAS

    as
    1. Chia-Lin Chang & Michael McAleer & Christine Lim, 2010. "Modelling the Volatility in Short and Long Haul Japanese Tourist Arrivals to New Zealand and Taiwan," Working Papers in Economics 10/40, University of Canterbury, Department of Economics and Finance.
    2. Chia-Lin Chang & Yiying Li & Michael McAleer, 2018. "Volatility Spillovers between Energy and Agricultural Markets: A Critical Appraisal of Theory and Practice," Energies, MDPI, Open Access Journal, vol. 11(6), pages 1-19, June.
    3. Chia-Ling Chang & Thanchanok Khamkaew & Michael McAleer & Roengchai Tansuchat, 2009. "Interdependence of International Tourism Demand and Volatility in Leading ASEAN Destinations," CIRJE F-Series CIRJE-F-687, CIRJE, Faculty of Economics, University of Tokyo.
    4. Medeiros, Marcelo C. & McAleer, Michael & Slottje, Daniel & Ramos, Vicente & Rey-Maquieira, Javier, 2008. "An alternative approach to estimating demand: Neural network regression with conditional volatility for high frequency air passenger arrivals," Journal of Econometrics, Elsevier, vol. 147(2), pages 372-383, December.
    5. Divino, J.A. & McAleer, M.J., 2008. "Modelling sustainable international tourism demand to the Brazilian Amazon," Econometric Institute Research Papers EI 2008-22, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    6. Chang, Chia-Lin & Hsu, Hui-Kuang & McAleer, Michael, 2014. "The impact of China on stock returns and volatility in the Taiwan tourism industry," The North American Journal of Economics and Finance, Elsevier, vol. 29(C), pages 381-401.
    7. Divino, Jose Angelo & McAleer, Michael, 2010. "Modelling and forecasting daily international mass tourism to Peru," Tourism Management, Elsevier, vol. 31(6), pages 846-854.
    8. McAleer, Michael, 2005. "Automated Inference And Learning In Modeling Financial Volatility," Econometric Theory, Cambridge University Press, vol. 21(01), pages 232-261, February.
    9. Shareef, Riaz & McAleer, Michael, 2008. "Modelling international tourism demand and uncertainty in Maldives and Seychelles: A portfolio approach," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 78(2), pages 459-468.
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    Citations

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    Cited by:

    1. Chia-Lin Chang & Hui-Kuang Hsu & Michael McAleer, 2017. "A Tourism Financial Conditions Index for Tourism Finance," Challenges, MDPI, Open Access Journal, vol. 8(2), pages 1-17, September.
    2. Anastasios Zopiatis & Christos S. Savva & Neophytos Lambertides & Michael McAleer, 2016. "Tourism Stocks in Times of Crises: An Econometric Investigation of Non-macro Factors," Tinbergen Institute Discussion Papers 16-104/III, Tinbergen Institute.
    3. Chang, C-L. & Hsu, S.-H. & McAleer, M.J., 2018. "Asymmetric Risk Impacts of Chinese Tourists to Taiwan," Econometric Institute Research Papers EI2018-18, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    4. Chia-Lin Chang & Shu-Han Hsu & Michael McAleer, 2018. "Risk Spillovers in Returns for Chinese and International Tourists to Taiwan," Tinbergen Institute Discussion Papers 18-031/III, Tinbergen Institute.
    5. Zopiatis, A. & Savva, C.S. & Lambertides, N. & McAleer, M.J., 2017. "Tourism Stocks in Times of Crises: An Econometric Investigation of Unexpected Non-macroeconomic Factors," Econometric Institute Research Papers EI2017-15, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    6. Chia-Lin Chang & Shu-Han Hsu & Michael McAleer, 2018. "An Event Study of Chinese Tourists to Taiwan," Tinbergen Institute Discussion Papers 18-003/III, Tinbergen Institute.

    More about this item

    Keywords

    Tourism research; tourism finance; growth in tourism; returns on tourism; volatility; fundamental equation; empirical finance; financial econometrics.;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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