Determinants of International Tourism
IMF Working Papers, May 12, 2014
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Bibliographic details
- Authors: Alexander Culiuc
- Published: May 12, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484383032.001
Overview and methodology
- Paper estimates the impact of macroeconomic supply- and demand-side determinants of tourism.
- Applies the gravity model to a large dataset comprising the full universe of bilateral tourism flows spanning over a decade.
- Scope: tourism as one of the largest components of services exports globally and the backbone of many smaller economies.
- Author: Alexander Culiuc.
- Date: May 12, 2014.
- Publication details:
- Pages: 46
- Volume: 2014
- Issue: 082
- Series: Working Paper No. 2014/082
- DOI: https://doi.org/10.5089/9781484383032.001
- Stock No: WPIEA2014082
- ISBN: 9781484383032
- ISSN: 1018-5941
Key empirical findings
- Gravity model performance:
- The gravity model explains tourism flows better than goods trade for equivalent specifications.
- Income elasticities:
- The elasticity of tourism with respect to GDP of the origin (importing) country is lower than for goods trade.
- Exchange rate effects:
- Tourism flows respond strongly to changes in the destination country’s real exchange rate.
- Responses occur along both extensive (tourist arrivals) and intensive (duration of stay) margins.
- OECD vs non-OECD dynamics:
- OECD countries generally exhibit higher elasticities with respect to economic variables (GDPs of the two economies, real exchange rate, bilateral trade) due to the larger share of business travel.
- Small-island tourism:
- Tourism to small islands is less sensitive to changes in the country’s real exchange rate.
- Tourism to small islands is more susceptible to the introduction/removal of direct flights.
Policy-relevant implications
- Exchange rate policy and competitiveness:
- Changes in the destination country’s real exchange rate can materially affect both tourist arrivals and length of stay, implying macroeconomic and exchange-rate policies can influence tourism receipts.
- Infrastructure and connectivity:
- For small islands, policies that affect air connectivity (direct flights) can have outsized effects on tourism flows relative to exchange-rate movements.
- Differentiated strategies by market type:
- OECD destinations, with higher business travel share, may see stronger responses to economic cycles and bilateral trade links; policy and marketing strategies should reflect differential demand elasticities across origin markets.
Source: Determinants of International Tourism, IMF Working Papers 2014, 082, Alexander Culiuc, May 12, 2014 (DOI: https://doi.org/10.5089/9781484383032.001).
Content in this bundle
- Determinants of International Tourism; by Alexander Culiuc; IMF Working Paper No. 14/82; May 2014