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Dynamic Impacts of Income and the Exchange Rate on US Tourism, 1960–2011

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  • Junwook Chi

    (School of Travel Industry Management, University of Hawaii at Manoa, 2560 Campus Road, George Hall 346, Honolulu, HI 96822, USA)

Abstract

This paper examines the short-run and long-run impacts of income and exchange rates on US exports and imports of tourism to improve understanding of the dynamic determinants of the US tourism trade balance. Using the bounds testing to cointegration procedure and data for the period 1960–2011, the paper finds that in the long run both US exports and imports of tourism are highly responsive to changes in real income, implying that the relative growth of foreign to domestic income is the key determinant of the US tourism trade balance. The real exchange rate is found to be a significant long-run factor affecting that balance. This finding indicates that an appreciation (depreciation) of US dollars deteriorates (improves) the US tourism trade balance. In the short run, income tends to have a significant impact on US exports and imports of tourism.

Suggested Citation

  • Junwook Chi, 2015. "Dynamic Impacts of Income and the Exchange Rate on US Tourism, 1960–2011," Tourism Economics, , vol. 21(5), pages 1047-1060, October.
    • Handle: RePEc:sae:toueco:v:21:y:2015:i:5:p:1047-1060
    DOI: 10.5367/te.2014.0399
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    References listed on IDEAS

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