An Econometric Estimation of the Demand for Tourism: The Case of Russia

Abstract

This paper examines the determinants of tourism revenues in Russia and gauges their impact on tourism demand over the period 1993:12 to 2002:10. The demand for tourism and the choice of tourist destinations are subject to significant swings for many reasons, including variations in income, exchange rates and prices, as well as unpredicted events such as relevant political changes. Therefore, reliable estimates of the elasticities of tourism demand become important for the formulation of efficient tourism policies. In this context a cointegration analysis of the demand for tourism in Russia within a VAR framework was carried out. The results suggest a robust and significant long-run cointegration relationship between Russian tourism receipts, world GDP, real exchange rates and air transport prices. In particular, the estimated income, cost of living and airfares elasticities are statistically significant and have the expected signs, and their values are in accordance with the empirical literature.