The authors estimate short-run and long-run elasticities for tourists visiting the island of Tenerife. Panel data analysis has rarely been used in previous empirical research. Most of the work in this field takes a price and an income variable to explain tourism demand, and less attention has been given to other variables, such as promotional expenditure. The authors find a significant influence in this variable. They also obtain significant elasticities for income, exchange rate, cost of the trip, and infrastructure.

This paper provides some new evidence on the credibility of the Exchange Rate Mechanism (ERM) of the European Monetary System (EMS). The study differs from previous research in the literature in three main respects. First, the main contribution is the use of several credibility indicators, some of which have never been applied before to all of the currencies under study. This allows one to strengthen the results obtained in this paper. Second, a longer period than that of previous studies is analysed, covering the complete EMS history. Third, a comparison has been made of the prediction qualities of the different indicators, in order to explore their ability to capture the main ERM events (realignments, changes in the fluctuations bands and speculative pressures). Fourth, the indicators are applied to the experience of the new, modified ERM linking the currencies of non-euro area Member States to the euro, showing the relevance of this approach in the near future with the enlargement of the European Union.

In this paper we consider the possibility that a linear cointegrated regression model with multiples structural changes would provide a better empirical description of the term structure model of interest rates. Our methodology is based on instability tests recently proposed in Kejriwal and Perron (2010) as well as the cointegration test in Arai and Kurozumi (2007) and Kejriwal (2008) developed to allow for multiple breaks under the null hypothesis of cointegration.

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