The driving effect of the Euro on inbound tourism: multiperiod DID method

Abstract

The introduction of the euro has greatly increased the amount of inbound tourists. The paper employs a multiperiod difference-in-differences (DID) model aimed at investigating the impact of the introduction of the euro on inbound tourism in 19 member states of the European Monetary Union (EMU) during 2002–2018. The results show that the euro has a significantly positive impact on international tourist arrivals and international tourism receipts in euro area countries. Moreover, there are also quantile differences in this effect. With increasing quantile levels, the quantile regression coefficients of the euro on international tourist arrivals are increasing, and the quantile regression coefficients of the euro on international tourism receipts are decreasing. Furthermore, the impact of the euro on international arrivals and international tourism receipts has been on the rise as the increase in the number of years of Eurozone accession, but the rate of growth is slowing, and the impact of the euro on inbound tourism has fluctuated with the European debt crisis. These results highlight that although the euro has a positive and significant effect on both international tourist arrivals and international tourism receipts, they are found to have different patterns and trends through the decomposition of quantile regression and segmented regression.