Dynamic analysis of British demand for tourism abroad
AuthorLyssiotou, Panayiota Flori
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This paper investigates how preference endogeneity, in the form of habit persistence, can affect short-run and long-run tourism expenditure decisions. The proposed model is applied to British quarterly data over the period 1979-91 and the empirical results suggest that preference endogeneity appears to have an important effect. This has policy implications for countries competing for British tourist arrivals. The differences between the short-run and long-run price and budget elasticities which are implied by habit persistence are also investigated.