THE EFFECT OF REAL EFFECTIVE EXCHANGE RATE AND NUMBER OF FOREIGN VISITORS ON TOURISM INCOME IN TURKEY: COINTEGRATION AND CAUSALITY ANALYSIS (2005- 2019)

Abstract

Tourism is a field of activity called the “smokeless factory” with rough description, which has an important place in development and employment policies. Moreover, tourism income is an important item in the foreign exchange inflow of countries and thus in closing the current deficit caused by foreign trade deficit. For this reason, it has become one of the sectors in our country which has become increasingly important and encouraged for its development in recent years. In this study,effect of the number of foreign visitors and exchange rate which are the determinants of tourism income on tourism income is examined empirically. In the research, quarterly datas of tourism income, the number of visitors and real effective exchange rate are used. As a result of Johansen cointegration analysis, long-term cointegration relationship has been determined between the series. It has been found that the number of visitors has positive and significant, the real effective exchange rate has negative and significant effect on tourism incomes. In the vector error correction model established after the cointegration relationship, the error correction coefficient is negative but not statistically significant. As a result of Granger causality analysis; two-way causality relations between real effective exchange rate and tourism income, one-way causality relations from visitor number towards real effective exchange rate direction have been detected. As a result, it has been revealed that increasing the number of visitors is an important factor in increasing tourism incomes, and that changes in the exchange rate affect tourism income.