Testing Alternative Dynamic Systems for Modelling Tourism Demand

Maria M. De Mello and Natércia Fortuna
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Maria M. De Mello: Centro de Estudos de Economia Industrial, do Trabalho e da Empresa (CETE), Universidade do Porto, Faculdade de Economia do Porto, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal
Natércia Fortuna: Centro de Estudos Macroeconómicos e Previsão (CEMPRE), Universidade do Porto

Tourism Economics, 2005, vol. 11, issue 4, 517-537

Abstract: This paper presents an empirical study of tourism demand dynamics and identifies areas in which the scrutiny of relationships between theoretical and empirical considerations is likely to produce new insights. A flexible general form of a Dynamic Almost Ideal Demand System (DAIDS) is derived to analyse UK tourism demand for the neighbouring destinations of Portugal, Spain and France during 1969–97. Nested within the general dynamic structure are Deaton and Muellbauer's static AIDS model itself, the partial adjustment model and the auto-regressive distributed lag model, which are tested against the general dynamic alternative. The empirical results obtained show that DAIDS is a data-coherent and theoretically consistent model, providing evidence of the robustness of this methodology for tourism demand analysis in a temporal context. Moreover, the dynamic model offers statistically strong evidence of the inadequacy of the orthodox static AIDS and other restricted models for the consistent reconciliation of data and theory within their formulations. Estimates for tourism price and expenditure elasticities are obtained, permitting a comparative analysis of the relative magnitudes and statistical relevance of the long-run and short-run sensitivity of UK tourism demand to changes in its determinants.

Keywords: tourism demand; dynamic almost ideal system; partial adjustment system; auto-regressive distributed lag system (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:11:y:2005:i:4:p:517-537

DOI: 10.5367/000000005775108719

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