The Effects of Business Cycles on Tourism Demand Flows in Small Island Destinations

Keywords

business cycle, cointegration, granger causality, small islands, tourism demand cycle

Abstract

This study examines the liaison between business cycles and tourism demand flows to Aruba and Barbados by considering the between- and within-dimensions of business cycle effects. The study demonstrates that business cycles have a causal, dynamic bearing on tourism demand cycles, depending on the intrinsic dimensions that connect the two cycles. The methodology includes panel data analysis (unit root, cointegration, and Granger causality testing) on a transformed annual time series from 1970 to 2014. The study reveals that negative cycles indicate larger effects than positive cycles. However, these effects are not always present, are of short-term duration, and transitory in nature—depending on the cycle interval, the source country, and the destination. The study indicates the nature of the relationship between business and tourism demand flow cycles, which could help tourism managers and policy makers refine their tourism development strategies.

Publication Date

1-1-2017

Number of Pages

1451-1475

Document Type

Article

Language

English

Source Title

Tourism Economics

Volume

23

Issue

7

College

Rosen College of Hospitality Management

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