The determinants of demand for tourism in Turkey: Does terror-threat matter? A Markov Regime Switching-VAR approach

Faik Bilgili, Serap Çoban, Cumali Marangoz, Emre Bulut and Sevda Kuşkaya ()
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Serap Çoban: Department of Economics, Nevşehir Hacı Bektaş Veli University, Turkey
Cumali Marangoz: Department of Business, Ağrı İbrahim Çeçen University, Turkey
Emre Bulut: Department of Business, Ağrı İbrahim Çeçen University, Turkey

Acta Oeconomica, 2021, vol. 71, issue 4, 587-607

Abstract: This paper investigates the impacts of potential determinants of demand for tourism in Turkey through Markov Regime Switching-Vector Auto Regression (MS-VAR) estimations from 1999 to 2017 on monthly data. The determinants are income level, exchange rates and the threat of terror incidences. The terror variable, following the Global Terrorism Index (GTI) 2017 report, is calculated for Turkey by the author. This research has conducted two separate MS-VAR models to observe the relevant parameters’ signs of the demand for tourism function. Both MS-VAR models revealed that income level and exchange rates have positive influences on tourism while the terror threat has a negative impact on tourism in Turkey. Terror adversely affects the demand for tourism in the short-term in which terror has occurred in the nearest past (i.e., a month ago). The MS-VAR models also yield that a similar negative impact of terror on tourism activities does not appear over the longer periods.

Keywords: tourism; terror; terrorism index; exchange rates; MS-VAR estimation; Turkey; government policy (search for similar items in EconPapers)
JEL-codes: B23 C22 F52 L83 Z3 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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