nep-tur New Economics Papers
on Tourism Economics
Issue of 2013‒11‒09
one paper chosen by
Laura Vici
Universita' di Bologna

  1. Estimating Demand Elasticities in Non-Stationary Panels: The Case of Hawaii's Tourism Industry By Peter Fuleky; Carl S. Bonham; Qianxue Zhao

  1. By: Peter Fuleky (University of Hawaii Department of Economics); Carl S. Bonham (University of Hawaii Department of Economics); Qianxue Zhao (University of Hawaii Economic Research Organizaion)
    Abstract: It is natural to turn to the richness of panel data to improve the precision of estimated tourism demand elasticities. However, the likely presence of common shocks shared across the underlying macroeconomic variables and across regions in the panel has so far been neglected in the tourism literature. We deal with the eects of cross-sectional dependence by applying Pesaran’s (2006) common correlated eects estimator, which is consistent under a wide range of conditions and is relatively simple to implement. We study the extent to which tourist arrivals from the US Mainland to Hawaii are driven by fundamentals such as real personal income and travel costs, and we demonstrate that ignoring cross-sectional dependence leads to spurious results.
    Keywords: Panel Cointegration, Cross-Sectional Dependence, Tourism Demand, Hawaii
    JEL: C23 C51 L83 R41
    Date: 2013–08

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