An Econometric Analysis of the Aggregate Outbound Tourism Demand of Turkey

Abstract

This study empirically examines aggregate tourism outflows in the case of Turkey using the time-series data for 1970–2005. As far as this article is concerned, there is no previous empirical work dealing with tourist outflows from Turkey. The previous tourism studies of Turkey have focused, by and large, on inbound tourism demand analyses. However, as a developing country and an important tourism destination, Turkey has also been a significant source for generating a substantial number of tourists in recent years. Therefore, the tourist outflows also merit empirical analysis. Total tourist outflows from Turkey are related to real income and relative prices. The bounds testing to cointegration procedure proposed by Pesaran et al (2001) is employed to compute the short- and long-run elasticities of income and relative prices. An augmented form of Granger causality analysis is conducted among the variables of outbound tourist flows, income and relative prices to determine the direction of causality. In the long run, causality runs interactively through the error correction term from income and relative prices to outbound tourist flows. However, in the short run, causality runs only from income to outbound tourism flows. The aggregate tourism outflows equation is also checked for the parameter stability via the tests of cumulative sum (CUSUM) and cumulative sum of the squares (CUSUMSQ). The results suggest that income is the most significant variable in explaining total tourist outflows from Turkey and there is a stable outbound tourism demand function. The results also lead to important policy recommendations.

Keywords

outbound tourism demand cointegration Granger causality stability tests Turkey

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