Scandinavian Working Papers in Economics

UiS Working Papers in Economics and Finance,
University of Stavanger

No 2018/3: The Oil Price Collapse and the Birth of a Tourist Nation

Jinghua Xie and Sigbjorn Tveterås ()
Additional contact information
Jinghua Xie: University of Stavanger, Postal: University of Stavanger, NO-4036 Stavanger, Norway
Sigbjorn Tveterås: University of Stavanger, Postal: University of Stavanger, NO-4036 Stavanger, Norway

Abstract: In this paper, we have estimated hotel revenue functions at the regional level in Norway. The purpose is to investigate the effects of the oil price collapse on tourism demand. The oil industry is a dominant economic sector in Norway. Its high demand for economic resources has inflated the general price level nationally. A side effect is that the Norwegian tourism industry has struggled with poor price competitiveness. We find the downfall in oil revenues caused by the fall in crude oil prices has boosted tourism growth through a weakening of the local currency, Norwegian kroner. This result suggests that a subset of rich countries where wealth inflate prices of tourism services can have problem in developing its tourism industry.

Keywords: Oil price; tourism; exchange rate; price competitiveness; Norway

JEL-codes: A10

28 pages, June 7, 2018

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