Effects of Price and Income on International Travel to the Dominican Republic: Co-integration and Causality Results

Santiago Grullón

Journal of Empirical Economics, 2013, vol. 1, issue 4, 107-114

Abstract: This article examines the impacts of relative-prices and income on visiting friends and relatives (VFR) travel to the Dominican Republic during the period 1990-2012. Using the „bounds‟ testing approach to co-integration, the results show the existence of a co-integrated relationship between relative-prices, US per capita income, and VFR travel. The long-run estimated relative-price demand elasticity is below unity and thus indicates that variations in relative-prices have no impact on VFR travel. However, the estimated income demand elasticity shows that VFR travel to the Dominican Republic is a luxury item. Moreover, Granger causality results show that relative-prices do not cause VFR travel from the US. There is also evidence of the existence of a causal linkage running from US per capita income to VFR travelers, and from US per capita income to relative- prices.

Keywords: price/income tourism demand elasticities; autoregressive distributed lag (ARDL); unrestricted error correction model; „bounds‟ test for co-integration; Granger causality (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:rss:jnljee:v1i4p1

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