A Simultaneous Model of Tourism Flow,Spending and Receipts

Abstract

It is generally accepted that more tourists will increase tourism receipts and more tourism receipts will, in turn, give rise to higher levels of domestic consumption. Tourists spend on goods and services within the destination; tourism acts as an export industry by bringing in new revenues from external sources. The amount of tourism expenditure that remains in an area provides a source of income to residents and businesses. Higher levels of tourist receipts in turn increase tourism spending outside the area. This paper, using econometric tests fitted to cross-sectional data (with 32 countries), shows that the number of tourists, tourism receipts and spending, as well as subsequent private domestic consumption, are closely linked. It also shows that both tourism spending abroad and receipts tend to increase with per capita income in the originating country.