Varying elasticities and forecasting performance

Egon Smeral, Haiyan Song

Research output: Journal article publicationJournal articleAcademic researchpeer-review

34 Citations (Scopus)


This study assumes that tourists' demand reactions to income and price changes are asymmetric at different phases of the business cycle. In order to test this hypothesis, we analyzed the demand for international tourism in five source markets using a modified growth rate (MGR) model. The empirical evidence demonstrates that income elasticity is indeed asymmetric across the business cycle in four source markets. In addition, asymmetric price effects were found for one source market. To compare forecasting performance, we also estimated a time-varying parameter (TVP) model. The results show that the MGR model generally outperforms the TVP model.
Original languageEnglish
Pages (from-to)140-150
Number of pages11
JournalInternational Journal of Tourism Research
Issue number2
Publication statusPublished - 1 Jan 2015


  • Asymmetric income and price effects
  • Business cycle
  • Forecasting error
  • Time-varying parameter model

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Transportation
  • Tourism, Leisure and Hospitality Management
  • Nature and Landscape Conservation


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