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

Round 1

Reviewer 1 Report

Manuscript number            economies-241458

Title 

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

Comments

This paper uses a log-linear demand function to estimate the impact of GDP and the real exchange rate on tourism demand. The motivation for the research is the novel use of the HICP when deriving the real exchange rate.

Major comments

·      The benefit from using the HICP is unclear in terms of the findings of the paper. This is critical to understanding the contribution of the paper.

·      In section 1, the contribution should be explained.

·      In section 2, there is no mention of similar studies in terms of country focus. Therefore, it is difficult for the reader to understand the novelty of this paper.

·      Section 3.2 should be extended to have a much more detailed overview and justification of the empirical approach (step-by-step) in the context of the current literature. Why a log-linear function? For example, why not a demand system such as the AIDS? What is the reason for including only these variables and not others?

·      Why are these countries selected? Countries such as Sweden are included but not even mentioned in section 1.

·      Some of the discussion in section 4 should be moved to the previous section. Section 4 should be more focussed on the policy conclusions and what we learn from using the HICP.  Furthermore, the results should be compared to the findings from other studies.

Minor comments

·      At the end of section 2, there is a discussion about the plan for the rest of the paper. This should be moved to the end of section 1.

Author Response

Reviewer 1 

Title  

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

Comments

This paper uses a log-linear demand function to estimate the impact of GDP and the real exchange rate on tourism demand. The motivation for the research is the novel use of the HICP when deriving the real exchange rate.

 Major comments

       The benefit from using the HICP is unclear in terms of the findings of the paper. This is critical to understanding the contribution of the paper.

 Answer: We added some paragraphs in the conclusion focusing on the need of future studies to reveal the benefits of using the HICP and to compare the results with CPI.

…………………………………………………………………………………………………..

      In section 1, the contribution should be explained.

 Answer: The main contribution of the paper was added to the section 1.

…………………………………………………………………………………………………..

      In section 2, there is no mention of similar studies in terms of country focus. Therefore, it is difficult for the reader to understand the novelty of this paper.

 Answer: There are of course many studies in tourism demand models using different variables but there is no any paper using the Harmonized Index of Consumer Prices for Restaurants and Hotels (HICP). So, at this point we did not get a chance to compare the results of this paper with them. We may think to make another updated paper for the same countries using HICP and CPI together to compare the results. In this new potential study, we can establish two different models using HICP and CPI separately to avoid the multicollinearity.This would be really very good idea.

…………………………………………………………………………………………………..

      Why are these countries selected? Countries such as Sweden are included but not even mentioned in section 1.

 Answer: These are the countries sending tourists to the USA the most in the EU. For that reason, they were selected.Another reason is that these countries provide more regular data for testing. Sweden was added to the section 1.We did not mentioned about Sweden too much it is because of its low weight in the US tourism demand

…………………………………………………………………………………………………..

      Some of the discussion in section 4 should be moved to the previous section. Section 4 should be more focussed on the policy conclusions and what we learn from using the HICP.  Furthermore, the results should be compared to the findings from other studies.

Answer: We removed some paragraphs from the conclusion section and moved them to previous sections. We expanded the conclusion.

…………………………………………………………………………………………………..

Minor comments

       At the end of section 2, there is a discussion about the plan for the rest of the paper. This should be moved to the end of section 1

Answer: We moved the plan of the paper to the end of section 1 on the reviewer’s requests

Author Response File: Author Response.docx

Reviewer 2 Report

Review:

-Notes on the introdcution

Just 80% -90% of the introduction focuses on the description of the US tourism market, but nothing is said about the main focus of the paper, the influence of REER and income on tourism demand. Additionally, the author notes the advantage of the US visa waiver system, but the reader is wondering what that has to do with the research question.

Only in the last sentence of the introduction the author mentions that the relationship between REER/ income and demand of tourism should be investigated.

The introduction should motivate the reader to develop an interest in the research objective and it should be explained why the research objective has some relevance. In this case it would be important that the author emphasizes and discusses the advantage of using the HICP instead of CPI. At the end of the introduction a short description of what follows in the text should be provided. The introduction has to be revised.  

-page 2: The author notes, “Tourists’ income, as a proxy of the tourist generator countries’ level of wealth, …”. This is misleading, because the underlying idea in most of the literature is, that the demand is in accordance with microeconomic utility maximization. The demand of a good is mainly influenced by the income of the consumer and the relative price of the good. The wealth of a country is an unusual concept, because I do not know any source which provides data on the wealth of country.

-page 2: The statement “The exchange rate is another independent variable which is often used in tourism demand models like income.” is misleading, if not wrong. The exchange rate is used as a proxy of the relative price of tourism, but not as a proxy for income.

-It would useful if the HICP would be explained much more in detail. Additionally, it would be good to compare it with the CPIs of the respective countries, to illustrate the differences in the developments.

-In general, it must be noted that the selection of papers in the literature review seems to be not up to date. Most of the cited literature is more than 10 years old. This has to be updated. (see list of possible papers at the end of this review) Additionally, the used econometric methods and results derived in the papers are of interest. Particularly, the paper

Seetaram, N., Forsyth, P., Dwyer, L. Measuring price elasticities of demand for outbound tourism using competitiveness indices (2016) Annals of Tourism Research, 56, pp. 65-79. DOI: 10.1016/j.annals.2015.10.004

should be discussed. However, the literature review should not become over excessively long, but a little bit more extensive.

-Regarding the data, the author shall provide the details of the sources, at best explicit links. To use the GDP is problematic, it is recommended to use the GDP per capita. Or the author must provide a good reasoning for her/her choice

-However, I think to use the HICP instead of CPI is a good idea, but it would be much more interesting if the reader could compare the outcomes with the outcomes which can be derived by using the CPIs. It would add much value to the paper, if the reader can recognize the differences in the outcomes. If the latter will not result and the outcomes will be quite similar the conclusion would be that the use of CPI is justified. Thus I would recommend that the author shall do the respective calculations and present the results. I think this can easily be done.

Minor points

Page 5, line 164 Why is RER in brackets?

Page 6, line 199 the author wrote, “.. when the value of the Italian Lira (recently €) against the US$ …” .  Maybe it is unknown to the author, but the Italian Lira was in principle abolished on the January 1st , 1999 (at that time the exchange rate EUR to Lira was fixed) and EUR notes and coins were introduced in Italy on January, 1st, 2001.

Footnote 4: The statement “The countries in European Union using € instead of their local currencies” is wrong, because nine EU member states have still their own currency (UK, Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania and Sweden), only countries of the European Monetary Union use the EUR.

Literature which should be considered for citation:

1) Lim, C., Zhu, L.

Dynamic heterogeneous panel data analysis of tourism demand for Singapore (2017) Journal of Travel and Tourism Marketing, 34 (9), pp. 1224-1234.

DOI:  10.1080/10548408.2017.1330173

2) Adeola, O., Boso, N., Evans, O.

Drivers of international tourism demand in Africa (2017) Business Economics, pp. 1-12. Article in Press.

DOI:  10.1057/s11369-017-0051-3

3) Khoshnevis Yazdi, S., Khanalizadeh, B.

Tourism demand: a panel data approach (2017) Current Issues in Tourism, 20 (8), pp. 787-800.

DOI:  10.1080/13683500.2016.1170772

4) Seetaram, N., Forsyth, P., Dwyer, L.

Measuring price elasticities of demand for outbound tourism using competitiveness indices

(2016) Annals of Tourism Research, 56, pp. 65-79.

DOI:  10.1016/j.annals.2015.10.004

6) Kamel, J., Ftiti, Z., Chaibi, H.

The Tunisian tourism business: What we learn about the European demand? (2015) Journal of Applied Business Research, 31 (6), pp. 2079-2090.

DOI:  10.19030/jabr.v31i6.9476

7) Karimi, A., Faroughi, P., Rahim, K.A.

Modeling and forecasting of international tourism demand in ASEAN countries (2015) American Journal of Applied Sciences, 12 (7), pp. 479-486.

8) Falk, M.

The sensitivity of tourism demand to exchange rate changes: an application to Swiss overnight stays in Austrian mountain villages during the winter season (2015) Current Issues in Tourism, 18 (5), pp. 465-476.

DOI:  10.1080/13683500.2013.810610

9) Kamel, J., Ftiti, Z., Chaibi, H.

The tunisian tourism business: What we learn about the European demand? (2015) Journal of Applied Business Research, 31 (6), pp. 1077-1088.

10) Altmark, S., Mordecki, G., Santiñaque, F., Adrián Risso, W.

Argentinian and Brazilian demands for tourism in Uruguay (2013) Tourism Analysis, 18 (2), pp. 173-182.

DOI:  10.3727/108354213X13645733247738

11) Falk, M.

The sensitivity of winter tourism to exchange rate changes: Evidence for the Swiss Alps (2013) Tourism and Hospitality Research, 13 (2), pp. 101-112.

DOI:  10.1177/1467358413519262

12) Schubert, S.F., Brida, J.G., Risso, W.A.

The impacts of international tourism demand on economic growth of small economies dependent on tourism (2011) Tourism Management, 32 (2), pp. 377-385.

DOI:  10.1016/j.tourman.2010.03.007

13) Seetaram, N.

Use of dynamic panel cointegration approach to model international arrivals to Australia (2010) Journal of Travel Research, 49 (4), pp. 414-422.

DOI:  10.1177/0047287509346992

14) Önder, A.Ö., Candemir, A., Kumral, N.

An empirical analysis of the determinants of international tourism demand: The case of Izmir (2009) European Planning Studies, 17 (10), pp. 1525-1533.

DOI:  10.1080/09654310903141748

15) Seo, J.H., Park, S.Y., Yu, L.

The analysis of the relationships of Korean outbound tourism demand: Jeju Island and three international destinations (2009) Tourism Management, 30 (4), pp. 530-543.  DOI:  10.1016/j.tourman.2008.10.013

16) Seetaram, N., Dwyer, L.

Immigration and tourism demand in Australia: A panel data analysis (2009) Anatolia, 20 (1), pp. 212-222.

17) Salman, A.K., Shukur, G., von Bergmann-Winberg, M.-L.

Comparison of econometric modelling of demand for domestic and international tourism: Swedish data (2007) Current Issues in Tourism, 10 (4), pp. 323-342. DOI:  10.2167/cit257.0

18) Mervar, A., Payne, J.E.

Analysis of foreign tourism demand for Croatian destinations: Long-run elasticity estimates (2007) Tourism Economics, 13 (3), pp. 407-420.

19) Hanly, P., Wade, G.

Research note: Modelling tourism demand - An econometric analysis of North American tourist expenditure in Ireland, 1985-2004

(2007) Tourism Economics, 13 (2), pp. 319-327.

20) Algieri, B.

An econometric estimation of the demand for tourism: The case of Russia (2006) Tourism Economics, 12 (1), pp. 5-20

21) Di Matteo, L.

Using alternative methods to estimate the determinants of cross-border trips (1999) Applied Economics, 31 (1), pp. 77-88.

Author Response

Reviewer 2 

-Notes on the introdcution

Just 80% -90% of the introduction focuses on the description of the US tourism market, but nothing is said about the main focus of the paper, the influence of REER and income on tourism demand. Additionally, the author notes the advantage of the US visa waiver system, but the reader is wondering what that has to do with the research question.

Answer: We added some paragraphs to the “introduction” explaining the importance of “visa waiver program” among these countries.

…………………………………………………………………………………………………..

Only in the last sentence of the introduction the author mentions that the relationship between REER/ income and demand of tourism should be investigated.

Answer: We expanded the introduction section

…………………………………………………………………………………………………..

The introduction should motivate the reader to develop an interest in the research objective and it should be explained why the research objective has some relevance. In this case it would be important that the author emphasizes and discusses the advantage of using the HICP instead of CPI. At the end of the introduction a short description of what follows in the text should be provided. The introduction has to be revised.  

Answer:  We expanded the introduction section

…………………………………………………………………………………………………..

-page 2: The author notes, “Tourists’ income, as a proxy of the tourist generator countries’ level of wealth, …”. This is misleading, because the underlying idea in most of the literature is, that the demand is in accordance with microeconomic utility maximization. The demand of a good is mainly influenced by the income of the consumer and the relative price of the good. The wealth of a country is an unusual concept, because I do not know any source which provides data on the wealth of country.

Answer: Yes, the reviewer is so right. Wealth is the value of all the assets of worth owned by a person and so it is different from income (flow concept).  We removed the word of “wealth” from the paragraph.

…………………………………………………………………………………………………..

-page 2: The statement “The exchange rate is another independent variable which is often used in tourism demand models like income.” is misleading, if not wrong. The exchange rate is used as a proxy of the relative price of tourism, but not as a proxy for income.

Answer: We corrected the explanation.

…………………………………………………………………………………………………..

 -It would useful if the HICP would be explained much more in detail. Additionally, it would be good to compare it with the CPIs of the respective countries, to illustrate the differences in the developments.

Answer:  The reviewer is so right, it would be really so good to compare the results of this study using HICP with the results of the study or studies using CPI. But this would only be possible for the studies examining the same time period,same time horizon and methodology and the same countries. We may think to make another updated paper for the same countries using HICP and CPI together to compare the results. In this new potential study, we can establish two different models using HICP and CPI separately to avoid the multicollinearity.This would be really very good idea.

…………………………………………………………………………………………………..

-In general, it must be noted that the selection of papers in the literature review seems to be not up to date. Most of the cited literature is more than 10 years old. This has to be updated. (see list of possible papers at the end of this review) Additionally, the used econometric methods and results derived in the papers are of interest. Particularly, the paper

Answer: We updated the literature review with below suggested articles 

…………………………………………………………………………………………………..

Seetaram, N., Forsyth, P., Dwyer, L. Measuring price elasticities of demand for outbound tourism using competitiveness indices (2016) Annals of Tourism Research, 56, pp. 65-79. DOI: 10.1016/j.annals.2015.10.004

should be discussed. However, the literature review should not become over excessively long, but a little bit more extensive.

Answer:  This paper was added to the literature review

…………………………………………………………………………………………………..

-Regarding the data, the author shall provide the details of the sources, at best explicit links. To use the GDP is problematic, it is recommended to use the GDP per capita. Or the author must provide a good reasoning for her/her choice

 Answer: Data resources were added to the text and reference list.

…………………………………………………………………………………………………..

-However, I think to use the HICP instead of CPI is a good idea, but it would be much more interesting if the reader could compare the outcomes with the outcomes which can be derived by using the CPIs. It would add much value to the paper, if the reader can recognize the differences in the outcomes. If the latter will not result and the outcomes will be quite similar the conclusion would be that the use of CPI is justified. Thus I would recommend that the author shall do the respective calculations and present the results. I think this can easily be done.

Answer:The reviewer is so right, it would be really so good to compare the results of this study using HICP with the results of the study or studies using CPI. But this would nly be possible for the studies examining the same time period,same time horizon and methodology. We may think to make another updated paper for the same countries using HICP and CPI together to compare the results. In this new potential study, we can establish two different models using HICP and CPI separately to avoid the multicollinearity.This would be really very good idea.

…………………………………………………………………………………………………..

Minor points

Page 5, line 164 Why is RER in brackets?

Answer: Brackets were removed from the text

…………………………………………………………………………………………………..

Page 6, line 199 the author wrote, “.. when the value of the Italian Lira (recently €) against the US$ …” .  Maybe it is unknown to the author, but the Italian Lira was in principle abolished on the January 1st , 1999 (at that time the exchange rate EUR to Lira was fixed) and EUR notes and coins were introduced in Italy on January, 1st, 2001.

Answer: We corrected the mistake.

…………………………………………………………………………………………………..

Footnote 4: The statement “The countries in European Union using € instead of their local currencies” is wrong, because nine EU member states have still their own currency (UK, Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania and Sweden), only countries of the European Monetary Union use the EUR.

 Answer: We removed the word of “Eurozone” from the paragraph. There is no need to mention about it here

…………………………………………………………………………………………………..

Literature which should be considered for citation:

 Answer: We updated the literature review with below suggested articles 

…………………………………………………………………………………………………..

1) Lim, C., Zhu, L.

Dynamic heterogeneous panel data analysis of tourism demand for Singapore (2017) Journal of Travel and Tourism Marketing, 34 (9), pp. 1224-1234.

DOI:  10.1080/10548408.2017.1330173

  Answer: Added to the reference list and literature review

…………………………………………………………………………………………………..

2) Adeola, O., Boso, N., Evans, O.

Drivers of international tourism demand in Africa (2017) Business Economics, pp. 1-12. Article in Press.

DOI:  10.1057/s11369-017-0051-3

 Answer: Added to the reference list and literature review

…………………………………………………………………………………………………..

3) Khoshnevis Yazdi, S., Khanalizadeh, B.

Tourism demand: a panel data approach (2017) Current Issues in Tourism, 20 (8), pp. 787-800.

DOI:  10.1080/13683500.2016.1170772

 Answer:  Added to the reference list and literature review

…………………………………………………………………………………………………..

4) Seetaram, N., Forsyth, P., Dwyer, L.

Measuring price elasticities of demand for outbound tourism using competitiveness indices

(2016) Annals of Tourism Research, 56, pp. 65-79.

DOI:  10.1016/j.annals.2015.10.004

 Answer: Added to the reference list and literature review.

…………………………………………………………………………………………………..

6) Kamel, J., Ftiti, Z., Chaibi, H.

The Tunisian tourism business: What we learn about the European demand? (2015) Journal of Applied Business Research, 31 (6), pp. 2079-2090.

DOI:  10.19030/jabr.v31i6.9476

 Answer: Added to the reference list and literature review

…………………………………………………………………………………………………..

7) Karimi, A., Faroughi, P., Rahim, K.A.

Modeling and forecasting of international tourism demand in ASEAN countries (2015) American Journal of Applied Sciences, 12 (7), pp. 479-486.

  Answer:Added to the reference list and literature review

…………………………………………………………………………………………………..

8) Falk, M.

The sensitivity of tourism demand to exchange rate changes: an application to Swiss overnight stays in Austrian mountain villages during the winter season (2015) Current Issues in Tourism, 18 (5), pp. 465-476.

DOI:  10.1080/13683500.2013.810610

Answer: Added to the reference list and literature review

…………………………………………………………………………………………………..

13) Seetaram, N.

Use of dynamic panel cointegration approach to model international arrivals to Australia (2010) Journal of Travel Research, 49 (4), pp. 414-422.

DOI:  10.1177/0047287509346992

 Answer: Added to the reference list and literature review

…………………………………………………………………………………………………..

15) Seo, J.H., Park, S.Y., Yu, L.

The analysis of the relationships of Korean outbound tourism demand: Jeju Island and three international destinations (2009) Tourism Management, 30 (4), pp. 530-543.  DOI:  10.1016/j.tourman.2008.10.013

 Answer: Added to the reference list and literature review

…………………………………………………………………………………………………..

Author Response File: Author Response.docx

Round 2

Reviewer 1 Report

There is no response to the following comment from my original report:

Section 3.2 should be extended to have a much more detailed overview and justification of the empirical approach (step-by-step) in the context of the current literature. Why a log-linear function? For example, why not a demand system such as the AIDS? What is the reason for including only these variables and not others?

Furthermore, please find a number of important additional suggestions following on from my original comments (and your responses):

The benefit from using the HICP is unclear in terms of the findings of the paper. This is critical to

understanding the contribution of the paper.

Answer:

We added some paragraphs in the conclusion focusing on the need of future studies to reveal

the benefits of using the HICP and to compare the results with CPI.

I would recommend that the you compare your results to previous studies using the CPI. This will allow you to expand your discussion regarding the contribution of your paper.

.................................................................................................................

In section 2, there is no mention of similar studies in terms of country focus. Therefore, it is

difficult for the reader to understand the novelty of this paper.

Answer:

There are of course many studies in tourism demand models using different variables but

there is no any paper using the Harmonized Index of Consumer Prices for Restaurants and Hotels

(HICP). So, at this point we did not get a chance to compare the results of this paper with them. We may

think to make another updated paper for the same countries using HICP and CPI together to compare

the results. In this new potential study, we can establish two different models using HICP and CPI

separately to avoid the multicollinearity.This would be really very good idea.

I recommend reviewing the similar studies using CPI in section 2. This will permit you to compare your results with the studies using the CPI later in the paper.

.................................................................................................................

Why are these countries selected? Countries such as Sweden are included but not even mentioned

in section 1.

Answer:

These are the countries sending tourists to the USA the most in the EU. For that reason, they

were selected. Another reason is that these countries provide more regular data for testing. Sweden was added to the section 1.We did not mentioned about Sweden too much it is because of its low

weight in the US tourism demand

I recommend adding a rationale for the country selection into the paper.

.................................................................................................................

Some of the discussion in section 4 should be moved to the previous section. Section 4 should be

more focussed on the policy conclusions and what we learn from using the HICP. Furthermore, the

results should be compared to the findings from other studies.

Answer:

We removed some paragraphs from the conclusion section and moved them to previous

sections. We expanded the conclusion.

This can be expanded further if you respond to the recommendations above.

Author Response

Dear Reviewer,

Thank you for your valuable comments.

Bests.

There is no response to the following comment from my original report:



Section 3.2 should be extended to have a much more detailed overview and justification of the empirical approach (step-by-step) in the context of the current literature. Why a log-linear function? For example, why not a demand system such as the AIDS? What is the reason for including only these variables and not others?

    In tourism demand models, a wide range of different factors can be used as independent variables such as political and social factors due to the increasing trend of globalization. All these factors not only in the destination also in the tourist generator countries can considerably effect the tourism demands of the countries. But the majority of the empirical studies have been testing the impacts of economic factors on the tourism demand models. These are mostly income and the real exchange rates as both Li et al. (2005) and Lim (1999) surveyed. Similarly, different econometric approaches mentioned in previous sections are applied.

    This study applies, the Panel cointegration analysis under cross-sectional dependence (CD) test and common correlated effects (CCE) approaches. In the panel data analysis, it is important to test the independence test for the panels forming the panel and whether the variables are homogeneous. The cross-sectional units are dependent on each other should be examined whether they are equally affected by shocks. Crosssectional depency and Homogeneity tests change the orientation and shape of unit roots and cointegration tests to be applied. In the study, firstly, the dependencies of the variables were determined by CD tests and the homogeneity test by delta tests. The series covered include both heterogeneous and cross-sectional dependence. ECM panel cointegration test was applied in the study Westerlund (2007). This test, developed by Westerlund (2007), is based on the assumption the series are at the same level and are stationary at the first difference. The panel cointegration test developed by Westerlund (2007) is independent of the horizontal sections forming the hypothesis panel when compared to the standard normal distribution critical value. Westerlund (2007) suggests that the test statistics calculated to take horizontal section dependence into account are compared with the "bootstrap" distribution critical values proposed in Chang (2004). The reason for this is that the variable with bootstrap tests and produces critical values with Monte Carlo simulation on average at least 1000 times. Horizontal section dependency and heterogeneity must be interpreted in consideration of panel bootstrap values. The heterogeneity, horizontal section dependence and the existence of cointegration relationship were estimated by the Common Corelated Effects Model (CCE) of the long-run cointegration vector of the model with numerical expressions. The CCE model is a predictor that can be used for N> T and N <T. Horizontal section dependency is taken into account. The slope is allowed to change the horizontal section from the horizontal section (Pesaran, 2006). An advantage of the CCE method is that long-run regression coefficients can be calculated for each horizontal section unit. It is also possible to make individual interpretations of the countries with calculated long-run regression coefficients for each horizontal section unit.

Furthermore, please find a number of important additional suggestions following on from my original comments (and your responses):



The benefit from using the HICP is unclear in terms of the findings of the paper. This is critical to

understanding the contribution of the paper.



Answer:

We added some paragraphs in the conclusion focusing on the need of future studies to reveal

the benefits of using the HICP and to compare the results with CPI.



I would recommend that the you compare your results to previous studies using the CPI. This will allow you to expand your discussion regarding the contribution of your paper.

We added two more studies using the CPI for the tourism demand to the USA. In most of the tourism demand models, the USA is considered as tourist generator country. So, there are very few studies examining the components of tourism demand models to the USA (tourist arrivals to the USA) 

.................................................................................................................



In section 2, there is no mention of similar studies in terms of country focus. Therefore, it is

difficult for the reader to understand the novelty of this paper.



Answer:

There are of course many studies in tourism demand models using different variables but

there is no any paper using the Harmonized Index of Consumer Prices for Restaurants and Hotels

(HICP). So, at this point we did not get a chance to compare the results of this paper with them. We may

think to make another updated paper for the same countries using HICP and CPI together to compare

the results. In this new potential study, we can establish two different models using HICP and CPI

separately to avoid the multicollinearity.This would be really very good idea.



I recommend reviewing the similar studies using CPI in section 2. This will permit you to compare your results with the studies using the CPI later in the paper..

We added some studies in which the CPI was used for the same group of countries we studied.

.................................................................................................................



Why are these countries selected? Countries such as Sweden are included but not even mentioned

in section 1.

Answer:

These are the countries sending tourists to the USA the most in the EU. For that reason, they

were selected. Another reason is that these countries provide more regular data for testing. Sweden was added to the section 1.We did not mentioned about Sweden too much it is because of its low

weight in the US tourism demand



I recommend adding a rationale for the country selection into the paper.

These are the only European countries providing data for the number of monthly tourist arrivals to the USA. Additionally, in 2015, nearly 43.2% of all oversea arrivals to the US came from these countries.

The above sentences were also added to the text
.................................................................................................................



Some of the discussion in section 4 should be moved to the previous section. Section 4 should be

more focused on the policy conclusions and what we learn from using the HICP. Furthermore, the

results should be compared to the findings from other studies.

Answer:

We removed some paragraphs from the conclusion section and moved them to previous

sections. We expanded the conclusion.



This can be expanded further if you respond to the recommendations above.

We compared the results of our study and the others for the same country groups on the section of “empirical results” just before the conclusion

Author Response File: Author Response.pdf