Tourism industry: Role of the real effective exchange rate
This paper aims to evaluate an econometric model of equilibrium for the Bulgarian foreign tourism industry. The main microeconomic assumptions of the model are the existence of identical consumers, identical composite tourism industry product and perfect market conditions. The real effective exc...
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| Format: | Article |
| Language: | English |
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University of the Algarve - ESGHT - CIEO
2014-01-01
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| Series: | Tourism & Management Studies |
| Subjects: | |
| Online Access: | https://tmstudies.net/index.php/ectms/article/view/620/1115 |
| _version_ | 1818152145993596928 |
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| author | Gancho Todorov Ganchev |
| author_facet | Gancho Todorov Ganchev |
| author_sort | Gancho Todorov Ganchev |
| collection | DOAJ |
| description | This paper aims to evaluate an econometric model of equilibrium for
the Bulgarian foreign tourism industry. The main microeconomic
assumptions of the model are the existence of identical consumers,
identical composite tourism industry product and perfect market
conditions. The real effective exchange rate (REER) is used as a proxy
for the composite product price and other proxies are introduced for
foreign income and domestic tourism industry capacity. The data is
deseasonalised with a geometric mean and the Hodrick-Prescott filter.
The TSLS method of estimation is applied to take into account the overidentified model. The estimation results are consistent with core
microeconomic theory. The estimated model allows for price
equilibrium convergence. Dropping the initial constraints allows for
additional conclusions.
The tourism industry can substantially gain from advertising, product
diversification and diminished reliance on summer bookings. Given the
important macroeconomic role of the tourism industry under the
Currency Board regime and the potential for tourism industry
vulnerability, the government could play an important role in
promoting sustainable development in the tourism sector. |
| first_indexed | 2024-12-11T13:50:04Z |
| format | Article |
| id | doaj.art-924ec708a0834b278cfac90212016dbf |
| institution | Directory Open Access Journal |
| issn | 2182-8466 |
| language | English |
| last_indexed | 2024-12-11T13:50:04Z |
| publishDate | 2014-01-01 |
| publisher | University of the Algarve - ESGHT - CIEO |
| record_format | Article |
| series | Tourism & Management Studies |
| spelling | doaj.art-924ec708a0834b278cfac90212016dbf2022-12-22T01:04:18ZengUniversity of the Algarve - ESGHT - CIEOTourism & Management Studies2182-84662014-01-0110SI174179Tourism industry: Role of the real effective exchange rateGancho Todorov Ganchev0South-West University “Neofit Rilski”, Dean, Faculty of Economics, 66 Ivan Michailov st., 2700 Blagoevgrad, BulgariaThis paper aims to evaluate an econometric model of equilibrium for the Bulgarian foreign tourism industry. The main microeconomic assumptions of the model are the existence of identical consumers, identical composite tourism industry product and perfect market conditions. The real effective exchange rate (REER) is used as a proxy for the composite product price and other proxies are introduced for foreign income and domestic tourism industry capacity. The data is deseasonalised with a geometric mean and the Hodrick-Prescott filter. The TSLS method of estimation is applied to take into account the overidentified model. The estimation results are consistent with core microeconomic theory. The estimated model allows for price equilibrium convergence. Dropping the initial constraints allows for additional conclusions. The tourism industry can substantially gain from advertising, product diversification and diminished reliance on summer bookings. Given the important macroeconomic role of the tourism industry under the Currency Board regime and the potential for tourism industry vulnerability, the government could play an important role in promoting sustainable development in the tourism sector.https://tmstudies.net/index.php/ectms/article/view/620/1115bulgariareal effective exchange ratepartial equilibriumsupply and demand curvestourism sector |
| spellingShingle | Gancho Todorov Ganchev Tourism industry: Role of the real effective exchange rate Tourism & Management Studies bulgaria real effective exchange rate partial equilibrium supply and demand curves tourism sector |
| title | Tourism industry: Role of the real effective exchange rate |
| title_full | Tourism industry: Role of the real effective exchange rate |
| title_fullStr | Tourism industry: Role of the real effective exchange rate |
| title_full_unstemmed | Tourism industry: Role of the real effective exchange rate |
| title_short | Tourism industry: Role of the real effective exchange rate |
| title_sort | tourism industry role of the real effective exchange rate |
| topic | bulgaria real effective exchange rate partial equilibrium supply and demand curves tourism sector |
| url | https://tmstudies.net/index.php/ectms/article/view/620/1115 |
| work_keys_str_mv | AT ganchotodorovganchev tourismindustryroleoftherealeffectiveexchangerate |