The Effects of Exchange Rate, Income and Habit on Japanese Travel to Canada

Abstract

Using three econometric models, this study examined the effects of habit, income, and exchange rate on the Canadian tourism industry. While the three variables were found to be significant in the explanation of tourist arrivals in earlier studies, the present study explored in greater details the extent and nature of their influences. The findings indicated that exchange rate was more powerful as an explanatory variable than income in both forecasting ability and stability. On the other hand, the habit variable was consistently important throughout all the estimation periods. The implications of the findings were discussed.