Does the Value of Currency Affect the Numbers of International Inbound Tourists to Turkey?

Abstract

This study examined the effect of the value of the currency on international inbound tourist numbers to Turkey from Germany and Russia, which are the top two tourist generating countries for Turkey. Two different Turkish Lira regimes are investigated with Threshold Vector Autoregressive (Threshold-VAR) models, using the real broad effective exchange rate for Turkey as a threshold variable. The endogenous variables vectors are the macroeconomic variables of the tourist origin countries: the real broad effective exchange rate, consumer price index ratio (proxying for the price level), and total industry production (proxying for income level) for Germany and Russia. Because of data constraints, the estimated Threshold-VAR models for Germany and Russia covered different periods