Determinants of International Tourism

May 12, 2014

Preview Citation

Format: Chicago

Alexander Culiuc. Determinants of International Tourism, (USA: International Monetary Fund, 2014) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper estimates the impact of macroeconomic supply- and demand-side determinants of tourism, one of the largest components of services exports globally, and the backbone of many smaller economies. It applies the gravity model to a large dataset comprising the full universe of bilateral tourism flows spanning over a decade. The results show that the gravity model explains tourism flows better than goods trade for equivalent specifications. The elasticity of tourism with respect to GDP of the origin (importing) country is lower than for goods trade. Tourism flows respond strongly to changes in the destination country’s real exchange rate, along both extensive (tourist arrivals) and intensive (duration of stay) margins. OECD countries generally exhibit higher elasticties with respect to economic variables (GDPs of the two economies, real exchange rate, bilateral trade) due to the larger share of business travel. Tourism to small islands is less sensitive to changes in the country’s real exchange rate, but more susceptible to the introduction/removal of direct flights.

Subject: Economic sectors, Exchange rates, Foreign exchange, International trade, Purchasing power parity, Real exchange rates, Tourism, Trade in goods

Keywords: Consumption basket, Destination country, Exchange rates, Global, Goods trade, Gravity equation, Gravity model, International Tourism, OECD tourism, Purchasing power parity, Real exchange rate, Real exchange rates, Small islands, Tourism, Tourism arrival, Tourism flow, Trade in goods, WP

Publication Details

Pages:

46
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/082
Stock No:

WPIEA2014082
ISBN:

9781484383032
ISSN:

1018-5941

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