Use of dynamic panel cointegration approach to model international arrivals to Australia

Research output: Contribution to journalArticle

35 Citations (Scopus)

Abstract

The aim of this article is to use dynamic panel data cointegration technique to determine elasticities of tourist arrivals to Australia, using income, real exchange rates, and airfares as demand determinants. Annual data from 1991 to 2007 for arrivals from the 10 main markets are used. Previous studies that applied dynamic panel data sets in the tourism context have used the Arellano-Bond estimation technique. Because this technique produces biased and inconsistent estimates in samples with a small time span, this article uses the corrected least square dummy variable technique to generate unbiased and efficient parameter estimates. The results obtained show that demand is inelastic with respect to its determinants in the short run and elastic in the long run. The main implications of these results are that maintaining destination price competitiveness and consumer satisfaction should be rated very high in the priorities of the Australian tourism industry.

LanguageEnglish
Pages414-422
Number of pages9
JournalJournal of Travel Research
Volume49
Issue number4
Early online date21 Oct 2009
DOIs
Publication statusPublished - 2010
Externally publishedYes

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panel data
tourism
real exchange rate
Tourism
competitiveness
determinants
elasticity
Elasticity
demand
estimation procedure
income
market
industry
tourist
Industry
Panel cointegration
Dynamic panel
price
parameter
Dynamic panel data

Cite this

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abstract = "The aim of this article is to use dynamic panel data cointegration technique to determine elasticities of tourist arrivals to Australia, using income, real exchange rates, and airfares as demand determinants. Annual data from 1991 to 2007 for arrivals from the 10 main markets are used. Previous studies that applied dynamic panel data sets in the tourism context have used the Arellano-Bond estimation technique. Because this technique produces biased and inconsistent estimates in samples with a small time span, this article uses the corrected least square dummy variable technique to generate unbiased and efficient parameter estimates. The results obtained show that demand is inelastic with respect to its determinants in the short run and elastic in the long run. The main implications of these results are that maintaining destination price competitiveness and consumer satisfaction should be rated very high in the priorities of the Australian tourism industry.",
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Use of dynamic panel cointegration approach to model international arrivals to Australia. / Seetaram, Neelu.

In: Journal of Travel Research, Vol. 49, No. 4, 2010, p. 414-422.

Research output: Contribution to journalArticle

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