This paper estimates the demand for tourism to Sweden and Norway from five countries: Denmark, the United Kingdom, Switzerland, Japan, and the United States. For each visiting country, and for selected regions in Sweden and Norway, we specify separate equations by including relative information. We then estimate these equations using Zellner's Iterative Seemingly Unrelated Regressions (ISUR). The benefit of this model is that the ISUR estimators utilize the information present in the error correlation of the cross regressions (or equations) and hence are more efficient than single equation estimation methods such as ordinary least squares. Monthly time series data from January 1993 to December 2006 are used. The results show that the consumer price index, some lagged dependent variables, and several monthly dummies (representing seasonal effects) have a significant impact on the number of visitors to the SW6 region in Sweden and Tröndelag in Norway. We also find that, in at least some cases, relative prices and exchange rates have a significant effect on international tourism demand.
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