Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 198: Estimating the Swedish and Norwegian International Tourism Demand using ISUR Technique

Khalik Salman , Leif Arnesson , Anna Sörensson and Ghazi Shukur ()
Additional contact information
Khalik Salman: Mid Sweden University
Leif Arnesson: Mid Sweden University
Anna Sörensson: Mid Sweden University
Ghazi Shukur: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden

Abstract: This paper estimates the demand for tourism to Sweden and Norway for five countries: Denmark, the United Kingdom, Switzerland, Japan, and the United States. For each visiting country, and for Sweden and Norway, we specify separate equations by including relative information. We then estimate these equations using Zellner’s Iterative Seemingly Unrelated Regressions (ISUR). The benefit of this model is that the ISUR estimators utilize the information present in the error correlation of the cross regressions (or equations) and hence are more efficient than single equation estimation methods such as ordinary least squares. Monthly time series data from 1993:01 to 2006:12 are used. The results show that the consumer price index, some lagged dependent variables, and several monthly dummies (representing seasonal effects) have a significant impact on the number of visitors to the SW6 region in Sweden and Tröndelag in Norway. We also find that, in at least some cases, relative prices and exchange rates have a significant effect on international tourism demand.

Keywords: tourism demand; significant factors; Iterative Seemingly Unrelated Regressions (ISUR)

JEL-codes: C51; L83

55 pages, September 28, 2009

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