Estimating Tourist Demand through Cointegration Analysis: Swedish Data

Abstract

The purpose of this paper is to use co-integration analysis to estimate the long-run relationship between monthly tourist flows to Sweden from American, European and Scandinavian countries. Also, the factors that influence arrivals, such as income, price, exchange rate, the Chernobyl nuclear accident and the 1991 Gulf War are estimated. An econometric model approach of cointegration analysis is adopted to estimate the effect of the above factors on the number of visitors to Sweden and the area No.6 in Sweden (SW:6). Monthly time-series data for the period 1980-1998 were used. The estimated model does not indicate any statistically significant effect of the Chernobyl nuclear accident, or the 1991 Gulf War on international tourism demand. On the other hand, the estimated model does indicate statistically significant effect of income, exchange rate and the consumer price index (CPI) on international tourism demand. The estimation and diagnostic testing strategy supports the specification of the model.