Persistency in tourism expenditure in a small-open economy

Abstract

This study aims to examine whether the shocks to the Turkish tourism have a permanent or a transitory effect on tourism expenditure for the period 1964–2012. We took the structural break periods from Lumsdaine and Papell (LP) unit-root test as a base and implemented the Augmented Dickey–Fuller unit-root test for the three different sub-periods of the series of tourism expenditure. In this study, we also estimated the measure of half-life for the effects of shocks on the series under consideration and the grid-bootstrap method to estimate confidence intervals. The results show, irrespective of the structural breaks, the effect of shocks on tourism expenditure is persistent; however, considering the structural breaks, the effect of shocks on tourism expenditure is transitory.