An Error Correction Analysis of Visitor Arrivals to the Bahamas

Jacky S. Charles and Thomas Fullerton ()

MPRA Paper from University Library of Munich, Germany

Abstract: Tourism is the major domestic export for many countries in the Caribbean region. Given this, the variables which influence tourism demand in this region, as well as accurate forecasts, can assist policy makers in their planning efforts and growth strategies. This study utilizes error correction models (ECMs) to analyze tourism demand in the Bahamas. Findings suggest that income and habit persistence/word of mouth advertising are the primary determinants of tourism demand in the Bahamas, while the cost of travel is generally insignificant. To further assess model reliability, forecasts of the ECMs are compared to random walk and random walk with drift benchmarks. The study finds that while the ECMs provide fairly reliable forecasts, their performances are not superior to those provided by random walk benchmarks.

Keywords: Tourism; Error Correction Analysis; Forecasts; Bahamas (search for similar items in EconPapers)
JEL-codes: M21 O54 (search for similar items in EconPapers)
Date: 2012-02-11
New Economics Papers: this item is included in nep-for and nep-tur
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:43064

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