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Impact of rouble’s depreciation on Russian overnight stays in Finnish regions and cities

Author

Listed:
  • Martin Falk

    (Austrian Institute of Economic Research (WIFO), Austria)

  • Markku Vieru

    (University of Lapland, Finland)

Abstract

This article investigates how the depreciation of the Russian rouble against the euro has affected Russian tourism demand in Finnish regions and cities. Using dynamic panel data models, the authors find that the elasticity of Russian tourists’ overnight hotel stays with respect to exchange rates is significantly larger than 1 (approximately 1.6) in absolute terms, indicating that Russian tourists are highly sensitive to changes in exchange rates. There is some evidence that the sensitivity of Russian tourism demand increased following the introduction of economic sanctions in August 2014. The sensitivity of tourism demand to exchange rate changes differs highly across regions and cities, with higher elasticities in border regions and cities not too far from the Russian border. These regions and areas attract a significant number of short-stay Russian visitors who are often motivated by cross-border shopping and other activities.

Suggested Citation

  • Martin Falk & Markku Vieru, 2017. "Impact of rouble’s depreciation on Russian overnight stays in Finnish regions and cities," Tourism Economics, , vol. 23(4), pages 854-866, June.
    • Handle: RePEc:sae:toueco:v:23:y:2017:i:4:p:854-866
    DOI: 10.5367/te.2016.0544
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    References listed on IDEAS

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    5. Joakim Westerlund, 2007. "Testing for Error Correction in Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(6), pages 709-748, December.
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