Study of Impact of Exchange Rate on Tourism Balance of Payment in Countries With Top Tourist Attractions (Vector Error Correction Approach)

Abstract

Exchange rate affects all economic aspects, including tourism balance of payment. The increase of exchange rate first worsens tourism balance of payments, then, after some period improves it. This path is called J-Curve. This article focuses on the impact of exchange rate on the balance of payment in selected countries of the premier tourist attractions in two groups of countries; countries with high and lower-middle per capita income in the period of 1995-2013 with VAR approach.The results show that there has been a J-curve in Sweden, South Africa, Bulgaria, Iran, and Egypt. However, that in other countries had not been approved. Also, variance decomposition of this in the countries studied shows that it was different from one country to another.