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Peering Through the Fog of Uncertainty: Out-of-Sample Forecasts of Post-Pandemic Tourism

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  • Cevik Serhan

    (International Monetary Fund, 700 19th Street, NW, 20431-0001, Washington, DC, USA)

Abstract

This paper uses an augmented gravity model framework to investigate the historical impact of infectious diseases on international tourism and develops an out-of-sample prediction model. Using bilateral tourism flows among 38,184 pairs of countries during the period 1995–2017, I compare the forecasting performance of alternative specifications and estimation methods. These computations confirm the statistical and economic significance of infectious-disease episodes in forecasting international tourism flows. Including infectious diseases in the model brings a significant improvement in forecast accuracy relative to the standard gravity model. The magnitude of these effects, however, is likely to be much greater in the case of COVID-19, which is a highly contagious virus that has spread fast throughout populations across the world.

Suggested Citation

  • Cevik Serhan, 2024. "Peering Through the Fog of Uncertainty: Out-of-Sample Forecasts of Post-Pandemic Tourism," Review of Economics, De Gruyter, vol. 75(1), pages 21-41, April.
    • Handle: RePEc:lus:reveco:v:75:y:2024:i:1:p:21-41:n:3
    DOI: 10.1515/roe-2023-0110
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    Keywords

    infectious diseases; tourism flows; gravity model; predictability; out-of-sample forecasting;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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