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DT 09/16 - Tourism demand for Mexico and Uruguay

ISSNISSN/ISBN: 1688-5090
AutorAuthor/s: Leiva, Ana, Mordecki, Gabriela , Desplas, Nathalie
Tourism is frequently viewed as an important engine for the economic growth and country’s development. In Mexico, the domestic trips have become a notable feature but the main tourism exports are from internationals travelers. In 2014 Mexico was the 10th most attractive country for travelers and 58.3% came from the United States.For Uruguay, total yearly tourists represent about 90% of its population, and Argentinean tourists represent nearly 60% of this total and historically they have been themain visitors. Tourist activities have a great impact on both economies, and in this paper, we try to measure tourism demand comparing Mexico and Uruguay, two very different countries, but for both tourism is an important industry, generating employment and income. Therefore, it is central to analyze the determinants behind tourism demand. We study the relationship between the number of US tourists for Mexico and Argentinean tourists for Uruguay, analyzing the relationship with the income and the real exchange rate (RER) of each country. We studied long-run cointegration vectors between variables, following Johansen methodology. We found one cointegration relationship for each country, through Vector error correction models (VECM). We found an income-elasticity greater than 2 for American tourists in Mexico, and near 3 for Argentinean tourists in Uruguay. Bilateral RER also were significant in both models.

 
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