Modeling the supply and demand for tourism: a fully identified VECM approach

Allison Zhou, Carl S Bonham () and Byron Scott Gangnes ()
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Allison Zhou: Department of Economics and University of Hawaii Economic Research Organization, University of Hawaii at Manoa

No 200717, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: Cointegration analysis has gradually appeared in the empirical tourism literature. However, the focus has been exclusively on the demand side, neglecting potentially-important supply-side influences and risking endogeneity bias. One reason for this omission may be the difficulty identifying structural relationships in a system setting. We estimate a vector error correction model of the supply and demand for Hawaii tourism using a theory-directed sequential reduction method suggested by Hall et al. (2002). We compare forecasts for the selected model and for two competing models. Diebold and Mariano (1995) tests for forecast accuracy demonstrate the satisfactory performance of this approach.

Keywords: catastrophe; Cointegration; Vector error correction model; Identification; Tourism demand and supply analysis; Hawaii (search for similar items in EconPapers)
JEL-codes: C32 L83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-for and nep-tur
Date: Written
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