Tourism Demand Spillovers between Australia and New Zealand

Abstract

International tourism is susceptible to fluctuations and shocks. The spillovers of international inbound tourism between Australia and New Zealand have been one of the key issues for both governments and tourism authorities to address. This paper used a bivariate GARCH model to investigate the spillovers of international tourist arrivals between Australia and New Zealand from seven countries (Canada, China, Germany, Japan, Korea, United Kingdom, and United States). The monthly international tourist arrivals between 2000 and 2012 were used for the empirical analysis. The findings suggested a significant spillover of Chinese and Japanese tourists from New Zealand to Australia, whereas New Zealand’s tourism demand from China and Japan was not significantly affected by that of Australia. However, New Zealand’s inbound tourism from Canada, Germany, and United States was significantly affected by tourism demand from those countries to Australia. Furthermore, symmetric spillovers between Australia and New Zealand (in both directions) existed for UK tourists.