Modelling the Growth and Volatility in Daily International Mass Tourism to Peru

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Peru is a South American country that is divided into two parts by the Andes Mountains. The rich historical, cultural and geographic diversity has led to the inclusion of ten Peruvian sites on UNESCO’s World Heritage List. For the potential negative impacts of mass tourism on the environment, and hence on future international tourism demand, to be managed appropriately require modelling growth rates and volatility adequately. The paper models the growth rate and volatility (or the variability in the growth rate) in daily international tourist arrivals to Peru from 1997 to 2007. The empirical results show that international tourist arrivals and their growth rates are stationary, and that the estimated symmetric and asymmetric conditional volatility models all fit the data extremely well. Moreover, the estimates resemble those arising from financial time series data, with both short and long run persistence of shocks to the growth rate in international tourist arrivals.
The authors are most grateful to Chialin Chang, Abdul Hakim, Christine Lim, and participants at the First Conference of the International Association for Tourism Economics, Palma de Mallorca, Spain, in October 2007 for helpful comments and suggestions, and to Marli Divino for organizing the data set. The second author wishes to acknowledge the financial support of the Australian Research Council.
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