A Study on the Mechanism of Promoting of New-building Cruise Ships in the World Cruise Industry
Journal of International Trade & Commerce, Vol.15, No.2, pp.1-13, April 2019
13 Pages Posted: 3 Jun 2019
Date Written: April 22, 2019
This study conducts a factor analysis using the Vector Error Correction Model (VECM) and attempts to find factors affecting the new-building of world cruise ships. The analysis results show that the total world new-building cruise fleet decreases by 1.6% when the number of world cruise tourists increases by 1.0% and decreases by 3.6% when the current world total cruise fleet increases by 1.0%. Also this study finds that the total world new-building cruise fleet increases by 0.3% when the world GDP increases by 1.0% and increases by 11.4% when the world seaborne traffic increases by 1.0%. Meanwhile, among the estimated p-values of four explanatory variables, the p-values of world GDP and world seaborne traffic are the lowest meaning that these two variables are the most statistically significant. And this study finds that it will be difficult to converge on long-term equilibrium with only the autonomous market mechanism alone if the current total world new-building cruise fleet deviates from the one at the long-term equilibrium using VECM. These results suggest that policy intervention is necessary to shorten the duration of the recession because Adam Smith's invisible hand principle cannot be applied to cruise market.
Keywords: Co-integration Test, Cruise, New-building of Cruise, Long-term Equilibrium, Vector Error Correction Model
JEL Classification: C30, Z30
Suggested Citation: Suggested Citation