Exchange Rate Elasticities of International Tourism and the Role of Dominant Currency Pricing

Ding Ding and Yannick Timmer

No 9743, CESifo Working Paper Series from CESifo

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 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-int, nep-mon, nep-opm and nep-tur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp9743.pdf (application/pdf)

Related works:
Journal Article: Exchange rate elasticities of international tourism and the role of dominant currency pricing (2023)
Working Paper: Exchange Rate Elasticities of International Tourism and the Role of Dominant Currency Pricing (2023)
Working Paper: Exchange Rate Elasticities of International Tourism and the Role of Dominant Currency Pricing (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9743

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().