Exchange Rate Volatility and Tourist Flows into Turkey

Abstract

This paper examines the effects of Exchange Rate Volatility on tourist flows into Turkey for the period of 1994~2012. Our results show that (i) there is a negative relationship between exchange rate volatility and tourist inflows into Turkey; (ii) there is a negative impact of the relative price ratio on the tourist flows indicating that relatively expensive places deter tourist arrivals, given the keen international competition among alternative destinations; (iii) GDP per capita at tourist origin, measured in Purchasing Power Parities, exerts positive influence on tourist flows. Our findings thus, suggest some direct policy implications: first, policy makers of a tourist destination country aiming to target potential markets for their tourist products, should, in principle, avoid markets prone to exchange rate volatility due to political and social upheavals or financial instability. Moreover, countries relying heavily on their tourism industry, should avoid using exchange rate policies for other policy objectives like international price competiveness, as these policies may end up to an exchange rate volatility that could reduce its tourism inflows substantially in the longer run. JEL classifications: F41, L83

The Effect of the Egyptian Pound Exchange Rate Change on the International Tourist Demand to Egypt

“…It is vital to understand, that the effects of exchange rate volatility on tourist arrivals depended on whether tourists were risk-averse or risk-lovers. Exchange rate volatility has a negative impact on the decision to travel for risk-averse tourists and, due to lower arrivals, has a positive impact on risk-seeking tourists because it is seen as a chance for making some profits; therefore, leads to higher arrivals (Agiomirgianakis et al, 2014). (CAPMAS, 2018).…”

Turist Akımları ile Döviz Kuru Oynaklığı Arasındaki İlişkinin Ampirik Yönden Analizi: ARDL Yöntemi

“…Agiomirgianakis et al (2014) used quarterly data between 1994 and 2012 in their study on exchange rate volatility and tourist flows in Turkey. There was a negative relationship between exchange rate volatility and tourist flows in the paper.…”

“…The model for examining the effect of exchange rate volatility on tourist flows is used also by Agiomirgianakis et al (2014) to examine the effect of exchange rate volatility on tourist flows. In this paper, the data for the period between the first quarter of 2003 and the first quarter of 2016 is used.…”

Factors influencing the Middle East tourist travelling to Malaysia: The quantile estimates

“…Changes in the currency rates are seen to have an impact on the total international travel costs of individuals. There are few studies conducted on the relationship between exchange rates and tourism demand in Turkey (Agiomirgianakis et al, 2014;Akay, 2017;Özcan & Uçak, 2016). Agiomirgianakis et al (2014) found that exchange rate volatility is negatively associated with the tourist inflow to Turkey.…”

“…There are few studies conducted on the relationship between exchange rates and tourism demand in Turkey (Agiomirgianakis et al, 2014;Akay, 2017;Özcan & Uçak, 2016). Agiomirgianakis et al (2014) found that exchange rate volatility is negatively associated with the tourist inflow to Turkey. Meanwhile, the research by (Kiliç & Bayar, 2014) for the period between 1994 and 2013 have found the effective exchange rates to be positively related to tourism acceptance and travel expenditures in that particular country.…”