Forecasting International Tourism with Due Regard to Asymmetric Income Effects

Egon Smeral
Additional contact information
Egon Smeral: Austrian Institute of Economic Research, Arsenal, Objekt 20, A-1030 Vienna, Austria, and Modul-University, Am Kahlenberg 1, A-1190 Vienna, Austria

Tourism Economics, 2014, vol. 20, issue 1, 61-72

Abstract: This study looks into ways of estimating tourism demand models while accounting for asymmetric income effects on demand across business cycles and using the estimated equations to forecast until 2015. Expenditure for outbound travel (tourism imports) in five source markets are analysed using econometric models that can capture varying magnitudes of price and income effects depending on the phase of the business cycle. The main reasons why income elasticities may vary across the business cycles are loss aversion, liquidity constraints and precautionary saving, as well as the intensity and time structure of substitution effects between expenditures on tourism imports, domestic tourism and other goods and services. The forecasting results clearly demonstrate that forecasting errors can be reduced by using the suggested approach, which considers possible asymmetric income effects, instead of the mainstream approach applied in most tourism demand studies, which is based on the assumption of constant elasticities across the business cycles.

Keywords: business cycle; asymmetric income effects; loss aversion; liquidity constraints; precautionary saving; forecasting error (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://journals.sagepub.com/doi/10.5367/te.2013.0259 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:20:y:2014:i:1:p:61-72

DOI: 10.5367/te.2013.0259

Access Statistics for this article

More articles in Tourism Economics
Bibliographic data for series maintained by SAGE Publications ().