Abstract
We investigate the effects of world income and the relative price of tourism in Thailand on Thailand's exports of tourism. In contrast to previous studies, we test for stationarity and cointegration of the variables of the model. We find that the variables are not stationary in level form, but they are cointegrated. Our estimate of the relative price elasticity of demand for Thailand's exports of tourism is - 1.199 in the short run and - 0.891 in the long run. The corresponding estimates for the income elasticity of demand are 1.926 and 2.342 respectively. However, only the short-run price elasticity of demand is significantly different from zero.
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