Estimating Demand Elasticities in Non-Stationary Panels: The Case of Hawaii's Tourism Industry
Carl Bonham (),
Peter Fuleky and
No 201303, Working Papers from University of Hawaii at Manoa, Department of Economics
Tourism demand elasticities are central to marketing, forecasting and policy work, but the wide array of occasionally counterintuitive estimates produced by existing empirical studies implies that some of those results may be inaccurate. To improve the precision of estimates, it is natural to turn to the richness of panel data. However, panel estimation using non-stationary data requires careful attention to the likely presence of common shocks shared across the underlying macroeconomic variables and across regions. Several recently developed econometric tools for panel data analysis attempt to deal with such cross-sectional dependence. We apply the estimator of Pesaran (2006) and Kapetinos, Pesaran and Yamagata (2010) to obtain tourism demand elasticities in non-stationary heterogeneous dynamic panels subject to common factors. We study the extent to which tourism arrivals from the US Mainland to Hawaii are driven by fundamentals such as real personal income and the cost of the trip, and we nd that neglecting cross-sectional dependence in the data leads to spurious results.
Keywords: Panel Cointegration; Cross-Sectional Dependence; Tourism Demand; Hawaii (search for similar items in EconPapers)
JEL-codes: C23 C51 L83 R41 (search for similar items in EconPapers)
Pages: 19 pages
New Economics Papers: this item is included in nep-cwa and nep-tur
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.economics.hawaii.edu/research/workingpapers/WP_13-3.pdf First version, 2013 (application/pdf)
Working Paper: Estimating Demand Elasticities in Non-Stationary Panels: The Case of Hawaii's Tourism Industry (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hai:wpaper:201303
Ordering information: This working paper can be ordered from
http://www.economics ... esearch/working.html
Access Statistics for this paper
More papers in Working Papers from University of Hawaii at Manoa, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Web Technician ().