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Modeling tourism: A fully identified VECM approach

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  • Bonham, Carl
  • Gangnes, Byron
  • Zhou, Ting
Abstract
System-based cointegration methods have become popular tools for economic analysis and forecasting. However, the identification of structural relationships is often problematic. Using a theory-directed sequential reduction method suggested by Hall, Henry and Greenslade [Hall, S. G., Henry, S., & Greenslade, J. (2002). On the identification of cointegrated systems in small samples: A modelling strategy with an application to UK wages and prices. Journal of Economic Dynamics and Control, 26, 1517-1537], we estimate a vector error correction model of Hawaii tourism, where both demand and supply-side influences are important. We identify reasonable long-run equilibrium relationships, and Diebold-Mariano tests for forecast accuracy demonstrate satisfactory forecasting performance.

Suggested Citation

  • Bonham, Carl & Gangnes, Byron & Zhou, Ting, 2009. "Modeling tourism: A fully identified VECM approach," International Journal of Forecasting, Elsevier, vol. 25(3), pages 531-549, July.
    • Handle: RePEc:eee:intfor:v:25:y:2009:i:3:p:531-549
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    References listed on IDEAS

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