IDEAS home Printed from https://ideas.repec.org/a/sae/toueco/v23y2017i7p1451-1475.html
   My bibliography  Save this article

The effects of business cycles on tourism demand flows in small island destinations

Author

Listed:
  • Robertico Croes

    (University of Central Florida, USA)

  • Jorge Ridderstaat

    (University of Central Florida, USA)

Abstract

This study examines the liaison between business cycles and tourism demand flows to Aruba and Barbados by considering the between- and within-dimensions of business cycle effects. The study demonstrates that business cycles have a causal, dynamic bearing on tourism demand cycles, depending on the intrinsic dimensions that connect the two cycles. The methodology includes panel data analysis (unit root, cointegration, and Granger causality testing) on a transformed annual time series from 1970 to 2014. The study reveals that negative cycles indicate larger effects than positive cycles. However, these effects are not always present, are of short-term duration, and transitory in nature—depending on the cycle interval, the source country, and the destination. The study indicates the nature of the relationship between business and tourism demand flow cycles, which could help tourism managers and policy makers refine their tourism development strategies.

Suggested Citation

  • Robertico Croes & Jorge Ridderstaat, 2017. "The effects of business cycles on tourism demand flows in small island destinations," Tourism Economics, , vol. 23(7), pages 1451-1475, November.
    • Handle: RePEc:sae:toueco:v:23:y:2017:i:7:p:1451-1475
    DOI: 10.1177/1354816617697837
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1354816617697837
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1354816617697837?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Plosser, Charles I, 1989. "Understanding Real Business Cycles," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 51-77, Summer.
    2. Vahid, F & Engle, Robert F, 1993. "Common Trends and Common Cycles," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(4), pages 341-360, Oct.-Dec..
    3. Picci, Lucio, 2001. "Explaining Long- and Short-Run Interactions in Time Series Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 85-94, January.
    4. Pedroni, Peter, 2004. "Panel Cointegration: Asymptotic And Finite Sample Properties Of Pooled Time Series Tests With An Application To The Ppp Hypothesis," Econometric Theory, Cambridge University Press, vol. 20(3), pages 597-625, June.
    5. Ms. Nicole Laframboise & Miss Nkunde Mwase & Mr. Joonkyu Park & Yingke Zhou, 2014. "Revisiting Tourism Flows to the Caribbean: What is Driving Arrivals?," IMF Working Papers 2014/229, International Monetary Fund.
    6. Paresh Kumar Narayan, 2011. "Are shocks to tourism transitory at business cycle horizons?," Applied Economics, Taylor & Francis Journals, vol. 43(16), pages 2071-2077.
    7. Mayers, Sherry-Ann & Jackman, Mahalia, 2011. "Investigating the business cycle properties of tourist flows to Barbados," MPRA Paper 38646, University Library of Munich, Germany.
    8. Peter Pedroni, 2000. "Fully Modified OLS for Heterogeneous Cointegrated Panels," Department of Economics Working Papers 2000-03, Department of Economics, Williams College.
    9. James Morley & Jeremy Piger, 2012. "The Asymmetric Business Cycle," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 208-221, February.
    10. Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375.
    11. Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 653-670, November.
    12. Michal Andrle, 2013. "What Is in Your Output Gap? Unified Framework & Decomposition into Observables," IMF Working Papers 2013/105, International Monetary Fund.
    13. Gomez, Victor, 2001. "The Use of Butterworth Filters for Trend and Cycle Estimation in Economic Time Series," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(3), pages 365-373, July.
    14. Alain Hecq & Franz Palm & Jean-Pierre Urbain, 2000. "Testing for Common Cyclical Features in Nonstationary Panel Data Models," CESifo Working Paper Series 248, CESifo.
    15. repec:bla:obuest:v:61:y:1999:i:0:p:653-70 is not listed on IDEAS
    16. Ridderstaat, Jorge & Oduber, Marck & Croes, Robertico & Nijkamp, Peter & Martens, Pim, 2014. "Impacts of seasonal patterns of climate on recurrent fluctuations in tourism demand: Evidence from Aruba," Tourism Management, Elsevier, vol. 41(C), pages 245-256.
    17. Davoud Mahmoudinia & Ehsan Salimi Soderjani & Farshid Pourshahabi, 2011. "Economic Growth, Tourism Receipts and Exchange Rate in MENA zone: Using Panel Causality Technique," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 16(2), pages 129-146, spring.
    18. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    19. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    20. Harding, Don & Pagan, Adrian, 2003. "A comparison of two business cycle dating methods," Journal of Economic Dynamics and Control, Elsevier, vol. 27(9), pages 1681-1690, July.
    21. Guizzardi, Andrea & Mazzocchi, Mario, 2010. "Tourism demand for Italy and the business cycle," Tourism Management, Elsevier, vol. 31(3), pages 367-377.
    22. Pedro M.D.C.B. Gouveia & Paulo M.M. Rodrigues, 2005. "Dating and Synchronizing Tourism Growth Cycles," Tourism Economics, , vol. 11(4), pages 501-515, December.
    23. Engle, Robert F. & Issler, Joao Victor, 1995. "Estimating common sectoral cycles," Journal of Monetary Economics, Elsevier, vol. 35(1), pages 83-113, February.
    24. Carla Massidda & Romano Piras, 2015. "Does Internal Migration Affect Italian Domestic Tourism? A Panel Data Analysis," Tourism Economics, , vol. 21(3), pages 581-600, June.
    25. Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1.
    26. Engle, Robert F. & Issler, João Victor, 1993. "Common trends and common cycles in Latin America," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 47(2), April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gu, Xinhua & Wu, Jie & Guo, Haizhen & Li, Guoqiang, 2018. "Local tourism cycle and external business cycle," Annals of Tourism Research, Elsevier, vol. 73(C), pages 159-170.
    2. Vatsa, Puneet, 2020. "Comovement amongst the demand for New Zealand tourism," Annals of Tourism Research, Elsevier, vol. 83(C).
    3. Lucie Plzáková & Egon Smeral, 2022. "Impact of the COVID-19 crisis on European tourism," Tourism Economics, , vol. 28(1), pages 91-109, February.
    4. Chien-Chiang Lee & Godwin O Olasehinde-Williams & Ifedolapo Olabisi Olanipekun, 2022. "GDP volatility implication of tourism volatility in South Africa: A time-varying approach," Tourism Economics, , vol. 28(2), pages 435-450, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kožić Ivan & Arčabić Vladimir & Sever Ivan, 2022. "Tourism and Business Cycles: Does the Relationship Fade Away?," Zagreb International Review of Economics and Business, Sciendo, vol. 25(1), pages 95-110.
    2. Cribari-Neto, Francisco, 1996. "On time series econometrics," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(Supplemen), pages 37-60.
    3. David Greasley & Les Oxley, 2010. "Cliometrics And Time Series Econometrics: Some Theory And Applications," Journal of Economic Surveys, Wiley Blackwell, vol. 24(5), pages 970-1042, December.
    4. Dilip M. Nachane & Amlendu Dubey, 2021. "The Spectral Envelope: An Application to the Decoupling Problem in Economics," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(1), pages 287-308, December.
    5. Vatsa, Puneet, 2020. "Comovement amongst the demand for New Zealand tourism," Annals of Tourism Research, Elsevier, vol. 83(C).
    6. Tommaso Mancini-Griffoli & Laurent L. Pauwels, 2006. "Is There a Euro Effect on Trade? An Application of End-of-Sample Structural Break Tests for Panel Data," IHEID Working Papers 04-2006, Economics Section, The Graduate Institute of International Studies, revised Apr 2006.
    7. Neil A. Wilmot & Ariuna Taivan, 2021. "Examining the Impact of Financial Development on Energy Production in Emerging Economies," JRFM, MDPI, vol. 14(2), pages 1-17, February.
    8. Bernstein, Ronald & Madlener, Reinhard, 2011. "Responsiveness of Residential Electricity Demand in OECD Countries: A Panel Cointegation and Causality Analysis," FCN Working Papers 8/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    9. Tang, Kin-Boon, 2011. "The precise form of uncovered interest parity: A heterogeneous panel application in ASEAN-5 countries," Economic Modelling, Elsevier, vol. 28(1-2), pages 568-573, January.
    10. George Halkos & Iacovos Psarianos, 2016. "Exploring the effect of including the environment in the neoclassical growth model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(3), pages 339-358, July.
    11. Apergis, Nicholas & Payne, James E., 2011. "The renewable energy consumption-growth nexus in Central America," Applied Energy, Elsevier, vol. 88(1), pages 343-347, January.
    12. E. M. Ekanayake & Mihalis Halkides & John R. Ledgerwood, 2012. "Inbound International Tourism To The United States: A Panel Data Analysis," International Journal of Management and Marketing Research, The Institute for Business and Finance Research, vol. 5(3), pages 15-27.
    13. Nagmi Moftah Aimer, 2020. "Renewable energy consumption, financial development and economic growth: Evidence from panel data for the Middle East and North African countries," Economics Bulletin, AccessEcon, vol. 40(3), pages 2058-2072.
    14. Hamit-Haggar, Mahamat, 2012. "Greenhouse gas emissions, energy consumption and economic growth: A panel cointegration analysis from Canadian industrial sector perspective," Energy Economics, Elsevier, vol. 34(1), pages 358-364.
    15. Revoredo-Giha, Cesar & Leat, Philip M.K. & Renwick, Alan W., 2012. "The relationship between output and unemployment in Scotland: A regional analysis," Working Papers 131465, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
    16. Apergis, Nicholas & Payne, James E., 2009. "Energy consumption and economic growth: Evidence from the Commonwealth of Independent States," Energy Economics, Elsevier, vol. 31(5), pages 641-647, September.
    17. Apergis, Nicholas & Payne, James E., 2011. "Renewable and non-renewable electricity consumption–growth nexus: Evidence from emerging market economies," Applied Energy, Elsevier, vol. 88(12), pages 5226-5230.
    18. Bertinelli, Luisito & Cardi, Olivier & Restout, Romain, 2022. "Labor market effects of technology shocks biased toward the traded sector," Journal of International Economics, Elsevier, vol. 138(C).
    19. Christian Dreger & Dierk Herzer, 2013. "A further examination of the export-led growth hypothesis," Empirical Economics, Springer, vol. 45(1), pages 39-60, August.
    20. Hakimi, Abdelaziz & Hamdi, Helmi, 2016. "Trade liberalization, FDI inflows, environmental quality and economic growth: A comparative analysis between Tunisia and Morocco," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1445-1456.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:toueco:v:23:y:2017:i:7:p:1451-1475. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.