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Economies 2017, 5(4), 51; doi:10.3390/economies5040051

The Effects of Real Exchange Rates and Income on International Tourism Demand for the USA from Some European Union Countries

1
Department of Economics, St. Mary’s College of Maryland, St. Mary’s City, MD 20686, USA
2
Department of Tourism Management, Atatürk University, Erzurum 25240, Turkey
3
Department of Economics, Atatürk University, Erzurum 25240, Turkey
*
Author to whom correspondence should be addressed.
Academic Editor: Juan Ignacio Pulido-Fernández
Received: 27 October 2017 / Revised: 30 November 2017 / Accepted: 1 December 2017 / Published: 18 December 2017
(This article belongs to the Special Issue Tourism Economics)
View Full-Text   |   Download PDF [250 KB, uploaded 18 December 2017]

Abstract

This paper investigates the effects of real exchange rates and income on inbound tourism demand (tourist arrivals) from Germany, France, the UK, the Netherlands, Italy, Spain, and Sweden to the USA over the period 1996Q3–2015Q1. To achieve this aim, the Harmonized Index of Consumer Prices (HICP) for Restaurants and Hotels was used for the first time—instead of using the general Consumer Price Index (CPI)—to transform the nominal exchange rate into the real exchange rate as an independent variable in tourism demand analysis models. Panel co-integration analysis under the cross-sectional dependence (CD) test and common correlated effects (CCE) approach was applied. Empirical results show that tourists visiting the USA are more sensitive to changes in the real exchange rate than changes in GDP. While French tourists respond highly to the GDP, British tourists respond highly to the real exchange rate. It should also be noted that the UK, having the highest responsiveness to the real exchange rate, is a country outside the Eurozone and also intends to leave the European Union. View Full-Text
Keywords: real exchange rate; Harmonized Index of Consumer Prices for Restaurants and Hotels (HICP); GDP; tourism demand real exchange rate; Harmonized Index of Consumer Prices for Restaurants and Hotels (HICP); GDP; tourism demand
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Ongan, S.; Işik, C.; Özdemir, D. The Effects of Real Exchange Rates and Income on International Tourism Demand for the USA from Some European Union Countries. Economies 2017, 5, 51.

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