Advances in Management and Applied Economics

Effects of Real Exchange Rate Volatility on Tourism Receipts and Expenditures in Turkey

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• Abstract

  The tourism industry has expanded worldwide over recent decades to become an important global business sector. The Turkish tourism sector has followed this trend, and Turkey is now a major global tourist destination. We examined the relationship between real effective exchange rate volatility and tourism receipts and expenditures in Turkey during the period from 1994:01 to 2013:08. Volatility in the real effective exchange rate was obtained with a generalised autoregressive conditional heteroscedasticity (1,1) model. The long-term relationship between the series was determined by the Johansen cointegration test, and the direction of this relationship was determined using pairwise Granger causality. Our empirical results indicate that there is a positive long-term relationship between the real effective exchange rate and tourism receipts and expenditures.