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Oil Price and Fijian Tourism Cycle: A Markov Regime-switching Model

Author

Listed:
  • Ann-Ni Soh

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia.)

  • Chin-Hong Puah

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia.)

  • M. Affendy Arip

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia.)

  • Tai-Hock Kuek

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia.)

Abstract

The fluctuation of oil price tends to have adverse effect on the tourism industry of a nation. This paper investigates the dynamic changes of the inbound tourism market for Fiji and the driving forces of the Fijian tourism cycle. Aset of fundamental determinants of tourism demand including international crude oil price has been utilized to predict the Fijian tourism cycle for the period of 2000-2017. The Markov regime-switching model identifies two distinct phases of the Fijian tourism cycle which are an expansion and a recession period. The filtered and smoothed probabilities signalled the Fijian tourism development significantly with the transition probabilities supported. The adequate dating evaluation can offer essential information for policymakers, tourism industry players and even the community in decision making for Fijian tourism to enhance the nation s development.

Suggested Citation

  • Ann-Ni Soh & Chin-Hong Puah & M. Affendy Arip & Tai-Hock Kuek, 2019. "Oil Price and Fijian Tourism Cycle: A Markov Regime-switching Model," International Journal of Energy Economics and Policy, Econjournals, vol. 9(6), pages 188-192.
    • Handle: RePEc:eco:journ2:2019-06-23
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    References listed on IDEAS

    as
    1. Özcan Ceyhun Can & Uçak Harun, 2016. "Outbound Tourism Demand of Turkey: A Markov Switching Vector Autoregressive Approach," Czech Journal of Tourism, Sciendo, vol. 5(2), pages 59-72, December.
    2. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-384, March.
    3. Hamilton, James D., 1990. "Analysis of time series subject to changes in regime," Journal of Econometrics, Elsevier, vol. 45(1-2), pages 39-70.
    4. Chow, Gregory C & Lin, An-loh, 1971. "Best Linear Unbiased Interpolation, Distribution, and Extrapolation of Time Series by Related Series," The Review of Economics and Statistics, MIT Press, vol. 53(4), pages 372-375, November.
    5. Stephen Pratt, 2014. "A General Equilibrium Analysis of the Economic Impact of a Devaluation on Tourism: The Case of Fiji," Tourism Economics, , vol. 20(2), pages 389-405, April.
    6. Cheng-Yih Hong & Chung-Huang Huang & Jian-Fa Li, 2017. "Factor Decomposition of Responsiveness of the Domestic Price to Crude Oil Price," International Journal of Energy Economics and Policy, Econjournals, vol. 7(6), pages 136-140.
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    Citations

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    Cited by:

    1. Ann-Ni Soh & Chin-Hong Puah & Meng-Chang Jong, 2022. "Macroeconomic Determinants of Tourism Demand in Malaysia: A Markov Switching Regression Approach," Business Management and Strategy, Macrothink Institute, vol. 13(2), pages 95-107, December.
    2. Woraphon Yamaka & Xuefeng Zhang & Paravee Maneejuk, 2021. "Analyzing the Influence of Transportations on Chinese Inbound Tourism: Markov Switching Penalized Regression Approaches," Mathematics, MDPI, vol. 9(5), pages 1-23, March.
    3. Jong, Meng-Chang & Soh, Ann-Ni, 2021. "Responsible Recovery from COVID-19: An Empirical Overview of Tourism Industry," MPRA Paper 107661, University Library of Munich, Germany.
    4. Ann-Ni Soh & Chin-Hong Puah & M. Affendy Arip, 2019. "Forecasting Tourism Demand with Composite Indicator Approach for Fiji," Business and Economic Research, Macrothink Institute, vol. 9(4), pages 12-22, December.
    5. Jong, Meng-Chang, 2020. "Empirical Review on Tourism Demand and COVID-19," MPRA Paper 103919, University Library of Munich, Germany.
    6. Soh, Ann-Ni, 2020. "A Review on the Leading Indicator Approach towards Economic Forecasting," MPRA Paper 103854, University Library of Munich, Germany.

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    More about this item

    Keywords

    Markov-switching model; Fijian tourism cycle; Oil price fluctuation; Forecasting;
    All these keywords.

    JEL classification:

    • Z32 - Other Special Topics - - Tourism Economics - - - Tourism and Development
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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