Effects of Price and Income on International Travel to the Dominican Republic: Co-integration and Causality Results
Journal Title: Journal of Empirical Economics - Year 2013, Vol 1, Issue 4
Abstract
This article examines the impacts of relative-prices and income on visiting friends and relatives (VFR) travel to the Dominican Republic during the period 1990-2012. Using the „bounds‟ testing approach to cointegration, the results show the existence of a co-integrated relationship between relative-prices, US per capita income, and VFR travel. The long-run estimated relative-price demand elasticity is below unity and thus indicates that variations in relative-prices have no impact on VFR travel. However, the estimated income demand elasticity shows that VFR travel to the Dominican Republic is a luxury item. Moreover, Granger causality results show that relative-prices do not cause VFR travel from the US. There is also evidence of the existence of a causal linkage running from US per capita income to VFR travelers, and from US per capita income to relative- prices.
Authors and Affiliations
Santiago Grullón
Keywords
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- EP ID EP27329
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