 The determinants of foreign tourism demand: separating elasticities for the extensive and the intensive marginEmanuele Breda () and Giacomo Oddo No 482, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area Abstract: This paper estimates the elasticities of Italy�s foreign tourism demand to relative prices, nominal and real exchange rates using a dataset for tourism flows to Italy (and its macro-regions) over the period 1997-2015. By separating total tourism expenditure into the number of arrivals and per-capita expenditure, the effect of each explanatory variable can be divided into an extensive and an intensive margin. This disaggregation helps to clarify the reasons behind the mixed evidence found in the literature and offers a richer interpretation of elasticities. We find that the elasticities of tourism expenditure to relative prices and to nominal and real exchange rates are negative and range from -0.5 to -0.7, in line with previous results found in the literature. The effect on expenditure is channelled mainly via the extensive margin (i.e. the number of arrivals). Southern Italy shows higher price elasticities than the rest of the country, signalling a higher exposure to the competitive pressures from other Mediterranean destinations. Keywords: international tourism; demand elasticity (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_482_19 Access Statistics for this paper More papers in Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area Contact information at EDIRC. |
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