The Impact of Foreign Exchange Rates on International Travel: The Case of South Korea
Journal of Distribution Science, Vol.10, No.9, pp.5-11, 2012
7 Pages Posted: 15 Nov 2015 Last revised: 18 Dec 2017
Date Written: October 30, 2012
The study examines long-run equilibrium relationships and Granger causal relationships between changes in foreign exchange rates and changes in inbound tourism demand and outbound tourism demand in South Korea. The study employs monthly time series data from January 1990 to September 2010 (249 observations). The paper examines the long-run equilibrium relationship using cointegration techniques and Granger causality with vector error correction methods. Test results indicate there is a long-run equilibrium relationship between the variables. In terms of directional causality, test results indicate that a change in exchange rates causes a change in outbound tourism demand although it does not cause a change in tourist arrivals to the country. In other words, for international travel the impact of tourism price competitiveness seems to have been moderated.
Keywords: tourism demand, exchange rates, price competitiveness, destination competitiveness, tourist arrivals, Korea
JEL Classification: F31, F47, L83, L88
Suggested Citation: Suggested Citation