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Price dynamics, foreign exchange and anticipated shocks in a tourism economy

Chao, Chi-Chur, Hu, Shih-Wen and Lu, Lee-Jung 2012, Price dynamics, foreign exchange and anticipated shocks in a tourism economy, Pacific economic review, vol. 17, no. 3, pp. 355-365, doi: 10.1111/j.1468-0106.2012.00587.x.

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Title Price dynamics, foreign exchange and anticipated shocks in a tourism economy
Author(s) Chao, Chi-Chur
Hu, Shih-Wen
Lu, Lee-Jung
Journal name Pacific economic review
Volume number 17
Issue number 3
Start page 355
End page 365
Total pages 11
Publisher Wiley-Blackwell Publishing Asia
Place of publication Richmond, Vic.
Publication date 2012-08
ISSN 1361-374X
1468-0106
Keyword(s) price dynamics
tourism
exports
Summary Using a dynamic model of an open monetary economy, this paper examines the effects of tourism-related anticipated shocks on goods prices and foreign exchange reserves. Foreign tourists consume mainly non-traded goods in holiday destinations, converting them into exportable goods. This gives rise to a tourism terms-of-trade effect that affects the accumulation of foreign exchange. Announcements of anticipated events bring tourist visits forward, resulting in an initial under-adjustment or an over-adjustment in the prices of the non-traded goods when the tourism terms-of-trade effect is positive or negative. This leads to an increase or a decrease in foreign reserves in the long run.
Language eng
DOI 10.1111/j.1468-0106.2012.00587.x
Field of Research 140207 Financial Economics
Socio Economic Objective 900301 Economic Issues in Tourism
HERDC Research category C1 Refereed article in a scholarly journal
Persistent URL http://hdl.handle.net/10536/DRO/DU:30049334

Document type: Journal Article
Collections: Faculty of Business and Law
Deakin Graduate School of Business
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Created: Fri, 02 Nov 2012, 11:36:56 EST by Aysun Alpyurek

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