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The real exchange rate and the balance of trade in US tourism

Ka Ming Cheng (), Hyeongwoo Kim () and Henry Thompson ()

International Review of Economics & Finance, 2013, vol. 25, issue C, 122-128

Abstract: This paper investigates the effects of the real exchange rate and income on US tourism export revenue and import spending with quarterly data for the floating exchange period from 1973 to 2010. Separate estimates of export revenue and import spending functions prove more revealing than estimates of the trade balance. Vector autoregressions capture dynamic adjustments to exchange rate and income shocks. Depreciation raises US tourism export revenue but does not affect import spending. US tourists going abroad respond to income while foreign tourists coming to the US do not.

Keywords: Trade balance; Real exchange rate; Tourism; J-curve; Vector autoregression (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1016/j.iref.2012.06.007

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Handle: RePEc:eee:reveco:v:25:y:2013:i:c:p:122-128