Inbound International Tourism to the United States: a Panel Data Analysis

The objective of this paper is to analyze the demand for tourist arrivals to the United States, using the panel cointegration technique. The study attempts to identify and measure the impact of the main determinants of inbound international tourism flows to the United States. The study uses annual data from 1986 to 2011 for tourist arrivals from 50 major countries of tourist origin. The specified model includes several country-specific determinants. The panel unit root tests indicate all the variables are integrated of order one. The panel cointegration tests show that all seven test statistics reject the null hypothesis of no cointegration at the 1% significance level, indicating that the five variables are cointegrated. The results suggest that tourism demand to the United States must be considered as a luxury good and is highly dependent on the evolution of relative prices and cost of travel between origin and destination country. The results also show that tourism demand is elastic with respect to income but inelastic with respect to tourism price, real exchange rate, and travel costs