nep-tur New Economics Papers
on Tourism Economics
Issue of 2022‒06‒20
two papers chosen by
Laura Vici
Università di Bologna

  1. Exchange Rate Elasticities of International Tourism and the Role of Dominant Currency Pricing By Ding Ding; Yannick Timmer
  2. Microeconomic Determinants of Domestic Tourism Expenditure in India By Azam, Mehtabul

  1. By: Ding Ding; Yannick Timmer
    Abstract: We estimate exchange rate elasticities of international tourism. We show that, in addition to the bilateral exchange rate, the exchange rate between the tourism origin country vis-à-vis the U.S. dollar is an important driver of tourism flows, indicating a strong role of U.S. dollar pricing. The U.S. dollar exchange rate is more important for tourism destination countries with higher U.S. dollar borrowing, pointing toward a complementarity between U.S. dollar pricing and financing. Country-specific dominant currencies (CSDCs) play only a minor role for the average country but are important for tourism-dependent countries and those with a high concentration of tourists. The importance of the U.S. dollar exchange rate represents a strong piece of evidence of dominant currency pricing (DCP) in the international trade of services and suggests that the benefits of exchange rate flexibility for tourism-dependent countries may be weaker than previously thought.
    Keywords: exchange rates, trade, tourism, dominant currency pricing
    Date: 2022
  2. By: Azam, Mehtabul (Oklahoma State University)
    Abstract: Using a nationally representative household survey from India, we examine individuals' domestic tourism participation and trip expenditure decisions together. We control for a large set of explanatory variables broadly classified as economic, socio-demographic and trip related characteristics. We use two-part (hurdle) model to allow explanatory variables to have differential affects on each decision. We find that education is an important determinant for both the decisions. Moreover, trip-related characteristics (party size, stay length, ac- commodation type, travel mode, and destination) are also important determinants of trip expenditure in addition to economic and socio-demographic characteristics. The unconditional quantile regression results show the heterogeneity in the impact of many variables across the trip expenditure distribution. The differences in trip expenditure across age-groups are primarily in the upper half of the trip expenditure distribution. A trip arranged under a tour package leads to an increase in trip expenditure at the higher quantiles of trip expenditure distribution.
    Keywords: unconditional quantile regression, two-part model, expenditure, tourism participation
    JEL: Z3 O12
    Date: 2022–04

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