Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 596: Dynamic and Stochastic Structures in Tourism Demand Modelling

Jonas Nordström ()
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Jonas Nordström: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

Abstract: In this paper we consider a model for international tourism demand. The analysis departure from a utility function that is both dynamic and stochastic. In the model the stochastic component is interpreted as random changes in preferences for goods and services, whereas the dynamic component can be seen as either habit formation or interdependent preferences. The resulting demand functions are estimated as a multivariate state space model, where the stochastic components enter the model as stochastic seasonal and trend components. An application is done for different segments of the Swedish tourism market.

Keywords: Demand analysis; Stochastic preferences; Time series; Tourism

JEL-codes: C22; C32; D12

15 pages, November 29, 2002

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