Determinants of Tourist Arrivals and Expenditures in Canada

Abstract

This study investigated the determinants and functional forms of international tourism demand for travel to Canada from the United States, the United Kingdom, France, theformer West Germany, and Japan. The independent variables, per capita income, exchange rate, travel price index, immigration, crime rate, special events, and a time trend, were hypothesized to influence tourist arrivals and expenditure. Both linear and log-linear functions were estimated, and a statistical method was applied to choose the appropriate functional form. Overall, with few exceptions, the variables examined explained a high percentage of variations in the dependent variables, and most variables had statistically significant coefficients with expected signs. This study shows that determinants of tourism demand may vary by country, suggesting that pooling data across countries needs to be treated with caution. While there appears to be almost universal agreement that the log-linear form is better than the linear form in the international tourism demand literature, it is shown that the popular view is often not supported by the data.