| 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 |
| URL: |
http://d.repec.org/n?u=RePEc:hai:wpaper:201314&r=tur |