Cointegration analysis of quarterly tourism demand by Hong Kong and Singapore for Australia
Hong Kong and Singapore are two of the most important and fastest growing markets for tourists to Australia. The purpose of this paper is to investigate movements in the long-run demand for tourist travel by these two origin countries for Australia. Some of the leading macroeconomic variables examined to explain tourism demand are incomes in Hong Kong and Singapore, tourism prices in Australia, and transportation costs and exchange rates between the two countries and Australia. Seasonally unadjusted quarterly data are used for Hong Kong for the period 1975(1)-1996(4), and for 1980(4)-1996(4) for Singapore. Several proxy variables are used for the incomes of tourists from Hong Kong and Singapore to explain quarterly tourist arrivals to Australia. The augmented Dickey-Fuller test for unit roots is examined in the univariate framework, and Johansen's maximum likelihood procedure is used to test for cointegration and to estimate the number of cointegrating vectors. Error correction models are estimated to explain quarterly tourism demand by Hong Kong and Singapore for Australia.