Short- and Long-Run Structural International Tourism Demand Modeling Based on the Dynamic AIDS Model: Empirical Research in Japan

Transcription

1 Asan Transport tudes, Volume 3, Issue 1 (2014), AT All rghts reserved hort- and ong-run tructural Internatonal Toursm Modelng Based on the Dynamc AID Model: Emprcal Research n Japan Atsush KOIKE a, Dasuke YOHINO b a Graduate chool of Engneerng, Kobe Unversty, Kobe, , Japan; E-mal: koke@lon.kobe-u.ac.jp b Infrastructure Plannng Dvson, Fukken Co., td., Tokyo, , Japan; E-mal: d-yoshno@fukken.co.jp Abstract: When proposng polces that am to promote nbound and outbound toursm markets, there should be a focus not only on the toursm demand n a certan regon but also on nterregonal relatonshps. To address ths ssue, we have developed the methodology for the quanttatve analyss of toursm demand structure by focusng on the elastcty of destnaton choce actvtes. The demand functon of destnaton choce actvtes s defned as a Dynamc AID (Almost Ideal ystem) model. The man goal of ths research s to examne the applcablty of the AID model to the estmaton of Japanese nternatonal toursm demand. Keywords: Dynamc AID, Elastctes, Inbound and Outbound, Toursm 1. INTRODUCTION In the late 1980s, the Japanese government formulated the 10 mllon plan, whch amed to brng the number of Japanese who traveled abroad to 10 mllon/year wthn fve years, and thus outbound toursm was promoted. As background to ths plan, the government was attemptng to solve a trade mbalance arsng from the expanson n made-n-japan products, and was also makng efforts to promote toursm exchange. The plan acheved ts goal n 1990, earler than antcpated because of the hgh yen and a boomng economy n Japan. ubsequently, because of the burstng of Japan s bubble economy, the government swtched to promotng nbound toursm to obtan foregn exchange. From 2003, the government launched the Vst Japan Campagn and amed to ncrease the number of ncomng foregn travelers to 10 mllon/year by In 2007, the government swtched to promotng both n- and outbound toursm. Because Japanese travelers nject a large amount of foregn currency nto the varous countres they vst, ths provdes huge economc assstance. Both n- and outbound toursm demands n Japan have ncreased snce 1970, and the regonal composton rato of toursm demand has changed from year to year (Fgures 1 and 2). Ths may have resulted from changes n destnaton choce actvtes, whch are affected by global economc condtons, such as the consumpton expendture of toursts, and prce and exchange rate fluctuatons. Therefore, when proposng polces that am to promote n- and outbound toursm markets, we should focus on not only a certan regon but also on nterregonal relatonshps. Correspondng author. 125

2 Number of Foregn Toursts to Japan (thous people) Number of Jaopanese Oversea toursts (thous people) Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), ,000 20,000 Oceana Asa Europe North Amerca 15,000 10,000 5, Fgure 1. Number of Japanese oversea toursts ( ) Data source: Whte paper on toursm (Japanese mnstry of land, nfrastructure, transport and toursm, ) 8,000 7,000 6,000 5,000 Oceana Asa Europe North Amerca 4,000 3,000 2,000 1, Fgure 2. Number of foregn toursts to Japan ( ) Data source: Whte paper on toursm (Japanese mnstry of land, nfrastructure, transport and toursm, ) 126

3 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), We have developed the methodology for the quanttatve analyss of toursm demand structure by focusng on the elastcty of destnaton choce actvtes. The demand functon of destnaton choce actvtes s defned as a Dynamc AID (Almost Ideal ystem) model. Ths model was developed to estmate varous elastctes such as own-prce, cross-prce, and expendture, and ths approach has been appled n the European toursm market (e.g., Durbarry and nclar, 2003). However, no study has nvestgated the case of Japan. Therefore, the man goal here s to examne the applcablty of the Dynamc AID model to the estmaton of Japanese nternatonal toursm demand. Ths paper s organzed as follows. ecton 2 revews the exstng lterature focusng on the estmaton of toursm demand. In ecton 3, the theory and characterstcs of the Dynamc AID model proposed n ths study are descrbed. ecton 4 descrbes results of the model estmaton; man conclusons and future tasks are summarzed n ecton ITERATURE REVIEW 2.1 Tradtonal Approach to Estmatng Toursm Much of the lterature on toursm demand has examned demand at the natonal level, although t can also be examned for dfferent components of toursm, such as accommodaton or attractons. It s known that toursm demand s responsve to varables such as ncome, relatve prces, and exchange rate. What s not known s how the responsveness of demand to changes n these varables alters durng a regon s economc transton and ntegraton nto the wder nternatonal communty. Furthermore, the degrees of complementarty and substtutablty between destnatons and the extent to whch these change durng perods of economc transton need to be examned. A number of models have been used n the lterature to estmate toursm demand. The large majorty of studes of toursm demand have been based on sngle equaton models of demand, estmated wthn a statc theory. Ths knd of model s not derved from consumer demand theory, and t cannot quantfy the changes n demand behavor that occur over tme. ubsequently, nnovatons n methodology were ntroduced n the form of sngle equaton models of demand estmated usng an error correcton methodology (e.g., oeb, 1982; Uysal and Crompton, 1984). Further, ong et al. (2000) used the error correcton model to estmate UK toursm demand n the form of vsts per capta to outbound destnatons and demonstrated that the model has good estmaton ablty. Ths modelng approach has the advantage of explct treatment of the tme dmenson of toursm demand behavor, and allows for mproved econometrc estmaton of the specfed equatons. However, as Durbarry and nclar (2003) noted, the man problem of the tradtonal sngle equaton model concerns the lack of relablty n the accuracy of the provded results, because the approach lacks a strct bass n consumer demand theory. The AID model of toursm demand s clearly superor n ths respect. 2.2 The AID Model A further approach to toursm demand estmaton nvolves a system of equaton models such as the AID model. The AID model s used n the feld of household expendture analyss, consumpton of goods, trade shares, etc. (e.g., Blundell and Brownng, 1994; Eakn and Gallagher, 2003; Choo et al., 2007). The advantages of the model relate to ts strct groundng n economc theory, the relatve smplcty wth whch t can be estmated, and the flexblty 127

4 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), wth whch t can be appled to dfferent contexts. Recent applcatons n the feld of toursm suggest that Deaton and Muellbauer s (1980) AID model provdes a well-structured framework for modelng toursm demand: t s based on economc theory, t satsfes the prncple of choce exactly, and can be used to test homogenety and symmetry restrctons. ome studes have appled ths approach n current toursm demand analyss (e.g., Mello et al., 2002; Wtt and Wtt, 1995; Durbarry, 2002). Untl recently, the lterature on AID has been focused on the statc soluton. The statc AID model assumes that there s no dfference between short- and long-run behavors, whch means that consumers behavor s always n equlbrum. However, t s the case that many factors often cause consumers to be out of equlbrum untl full adjustment takes place. Therefore, the assumpton of the statc AID model s unrealstc n some cases. As a result of the nablty of the long-run specfcaton to explan dynamc adjustment of toursm demand, some researchers have recently focused on not only long-run solutons but also on short-run dynamcs by usng the Dynamc AID model (e.g., Durbarry and nclar, 2003; et al., 2010; Chang et al., 2012). For example, Durbarry and nclar (2003) examne the magntudes and determnants of changes n destnaton shares of a major tourst orgn market based on the dynamc AID model. They used the model to quantfy the responsveness of French toursm demand n European countres to changes n prce ndex, and both long- and short-run demand elastctes were calculated. et al. (2010) and Chang et al. (2012) also estmated the prce compettveness and nterdependences of toursm demand for competng destnatons n both long- and short-run error correcton specfcatons. However, there are few emprcal studes of nternatonal toursm demand usng econometrc models for Japan. As prevous estmates from AID models n the lterature have suggested that useful mplcatons can be drawn regardng toursm compettveness, the AID approach for both statc and dynamc specfcatons s used here to nvestgate the Japanese n- and outbound demand for varous destnatons/orgns worldwde. 3. MODE EXPANATION AND DATA 3.1 Tradtonal tatc AID Model In ths secton, the theory and characterstcs of the Dynamc AID model proposed n ths study are descrbed. Frst, we ntroduce the tradtonal statc AID model that forms the bass of the Dynamc AID model. Followng Deaton and Muellbauer (1980), we defne the toursm expendture functon of -th destnaton regon as: 1 ln Ep; u 0 ln p j j ln p ln p j u0 p (1) 2 where, E : total of toursts expendture, p : prce of toursm, u : utlty, : destnaton regon, j : alternatve destnatons, 0,, 0,, j : parameters that need to be estmated. 128

5 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), The demand functons can be derved drectly from equaton (1). It s a fundamental property of the cost functon (see hephard, 1970) that ts prce dervatves are the quanttes demanded: Ep; u p q ; we fnd the budget share of -th destnaton regon w as follows. w p p u Ep; u E p; u ln Ep; u (2) E p q ; p ln p Hence, logarthmc dfferentaton of (1) gves the budget shares as a functon of prces and utlty: w j j j 0 ln p u p (3) where the lmtaton s mposed. j j For a utlty-maxmzng consumer, total expendture x s equal to E(p;u) and ths equalty can be nverted to gve u as a functon of p and x, the ndrect utlty functon. If we do ths for (1) and substtute the result nto (3), we have the budget shares as a functon of p and x; these are the AID demand functons n budget share form: w x p j j ln j ln (4) P where P s prce ndex and s expressed as follows. 1 ln P 0 ln p j j ln p ln p j (5) 2 The restrctons on the parameters comply wth the assumptons and ensure that equaton (5) defnes P as a lnear homogeneous functon of ndvdual prces. If prces are relatvely collnear, P wll be approxmately proportonal to any approxmately defned prce ndex, for example, the one used by Deaton and Muellbauer (1980). Hence, n ths study, P n equaton (5) can be smplfed usng the tone prce ndex (tone, 1954). ln P w ln p ( tone prce ndex) (6) 3.2 Formulaton of the Dynamc AID Model A statc AID specfcaton gnores potental sgnfcant short-run elastcty measures that dffer from the long-run estmates. Moreover, n the context of tax polcy and busness strategy, decson makers are more lkely to be concerned wth short-run elastcty estmates and the speed at whch these estmates reach ther long-run level. A dynamc AID model that ncorporates such short-run estmates s an error correcton representaton of the AID model. Ths form s descrbed as the partal dfferental equaton of the frst order. In ths next equaton, means long run and means short-run: 129

6 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), w t t ln j t p jt x ln P t w t x 1 t 1 j t q ln p jt1 t 1 ln P t 1 (7) where, : the dfference operator ( x t xt xt 1 ). Ths equaton captures the dynamcs of toursm demand, showng that current changes n budget shares depend on not only current change n the normal AID explanatory varables but also on the extent of consumer dsequlbrum n the prevous perod. In the long run, the coeffcents of the prce varables,, represent the absolute change n the prce of regon j, j ceters parbus. Thus, the prce varables take account of the effectve prce n the destnaton regon relatve to that n other destnatons. The coeffcents represent the absolute change n the -th expendture share gven a 1% change n real per capta expendture. The parameter measures the speed of adjustment to the long-run equlbrum, for example, =1 adjustment s nstantaneous. The restrctons on the parameters of (1) mply restrctons on the parameters of the AID equaton (7). We take these n three sets. Addng-up restrctons: term term term 1, 0, 0 term, (8) j Homogenety: term 0 term (9) j j, ymmetry: term term term (10) j j, Provded (8), (9), and (10) hold, equaton (7) represents a system of demand functons that add up to total expendture ( w 1 ), that are homogeneous of degree zero n prces and total expendture taken together, and that satsfy lutsky symmetry. There are many constrant condtons n the Dynamc AID model. In such cases, the URE estmaton method s often used as a parameter estmaton method (Zellner, 1962). Therefore, ths method s also used n ths study. If these three restrctons are satsfed, expendture and prce elastctes cannot be drectly accessed n (7), gven ts lnear-log form. Nevertheless, the elastctes can be retreved from coeffcents n (7) by means of: Expendture elastcty: term term Own-prce elastcty: 1 (11) w term term term 1 (12) w 130

7 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), Cross-prce elastcty: term term j w term j j (13) w w where, w : the sample s average share of destnaton n the base year, wj : the sample s average share of destnaton j n the base year. 3.3 Data Outbound toursm demand The data used n the outbound toursm analyss are shown n Table 1. The number of Japanese travelers for each regon s ndcated as a demand varable. It s assumed that three prce varables affect the demand of Japanese outbound toursm: the toursm expendture of Japanese overseas toursts, the prce of commodtes n each regon, and the exchange rate. The panel data of commodty prces are calculated from the consumer prce ndex (tme-seres data) and the prce level ndex (cross-sectonal data) for because of data avalablty. Prce data are not organzed by regonal level; thus, the regonal data are replaced by a representatve country (.e., North Amerca: UA; Europe: France; Asa: Korea; and Oceana: Australa). In addton, transportaton costs are excluded from the prce ndex n ths study for the followng reasons. Frst, changes of transportaton costs are ncluded n changes of commodty prce, and relatvely speakng, the proporton of transport cost to total expendture s stable. For example, the rse n gasolne prce affects global markets; therefore, the relatve gasolne prce remans unchanged. econd, transport data are not avalable from each country s statstcs. In fact, n some studes, transportaton costs had been excluded from the prce ndex (e.g., Durbarry and nclar, 2003) Inbound toursm demand The relatve prce data are common to both the nbound and outbound analyses. Only the toursm demand data n the nbound analyss are dfferent from the outbound study; the number of foregn toursts to Japan (see Japanese mnstry of land, nfrastructure, transport and toursm, ) ndcates nbound demand. Because of model characterstcs, however, we should note that the nbound analyss based on the AID model has two techncal problems. Frst, although ths model should deally deal wth four consumers (.e., North Amerca, Europe, Asa, and Oceana), the AID model assumes only one consumer, and thus there s a theoretcal msmatch. econd, for the nbound case, the AID model cannot consder relatve prces (except Japan) because ths model determnes only one demand (.e., toursm demand to Japan). These two ssues obvously need to be addressed. However, n the present tral mplementaton, these ssues reman n our analyss. Drectons for future research are dscussed n ecton EMPIRICA REUT 4.1 Results of Outbound Toursm 131

8 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), / Prce Item Data Regon Table 1. Data lst ource Perod Number of Japanese traveler North Amerca, Europe, Asa, Oceana *Except Oceana Whte paper on Toursm: Japanese Mnstry of and, Infrastructure, Transport and Toursm. (except Oceana) *Oceana Australan Bureau of tatstcs HP Prce Consumer prce ndex (tme-seres data) Prce level ndex (cross-secton data) The yen exchange rate Japan, UA, France, Korea, Australa Japan, UA, France, Korea, Australa Japan, UA, France, Korea, Australa World statstcs and Internatonal statstcal drectory: Japanese Bureau of tatstcs World statstcs: Japanese Bureau of tatstcs *Except Korea The new Japan hstorcal statstcs lst: Japanese Bureau of tatstcs *Korea East Asa hstorcal economc statstcs, Vol.1 (Korea): Takushoku Unversty Asan Informaton Center World Bank HP Parameter estmaton The estmaton results of parameters are shown n Table 2. For every model, we have calculated and recorded the followng varables: 1) Value of the estmated parameters, 2) t-statstc for the parameters, 3) tandard error for the parameters, 4) Coeffcent of determnaton R 2, 5) Durbn Watson (DW) statstc. Approxmately half of the parameters are sgnfcant at the 5% level. Although R 2 n the long run n Asa s relatvely hgh (0.5977), the other regons ndcate low scores. Thus, the future challenge s to mprove the goodness of ft of the data for the model. The DW statstc s a smple numercal method for checkng seral dependence. The DW statstc ranges n value from 0 to 4. A value near 2 ndcates non-autocorrelaton; a value toward 0 ndcates postve autocorrelaton; a value toward 4 ndcates negatve autocorrelaton. From these results, the DW statstcs are not enough n the long-run model. It means that there exsts the error correlaton, and the R 2 mght be estmated as excessvely hgh n the long-run model. On the other hand, n the short-run model, the DW statstcs are near 2 wth the ntroducton of the short-run part. As shown n Table 2, the adjustment factor s Therefore, the adjustment perod to long-run equlbrum ( 1 / ) s 3.4 years. 132

9 ong-run Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), Table 2. Estmated parameter (Outbound) R 2 DW 1.North Amerca estmate E t-stat ** + ** ** 2.Europe estmate E t-stat 3.Asa estmate E t-stat * ** + * 4.Oceana estmate E t-stat ** ** hort-run R 2 DW 1.North Amerca estmate E t-stat ** 2.Europe estmate E t-stat + 3.Asa estmate E t-stat ** + 4.Oceana estmate E t-stat NOTE: 1) estmate: estmated parameter, E: standard error, t-stat: t-statstc. 2) R 2 : coeffcent of determnaton, DW: Durbn-Watson statstc. 3) +, * and ** denote acceptance at the 10%, 5% and 1% sgnfcance levels respectvely. 133

10 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), Elastctes The effects of the dfferent varables on Japanese outbound toursm demand are ndcated by the elastcty values. The estmated values are shown n Table 3. Table 3. Expendture, own-prce, and cross-prce elastctes (Outbound) hort-run Prce Elastcty Expendture Destnaton Elastcty North Europe Asa Oceana Amerca North Amerca Europe Asa Oceana ong-run Destnaton Expendture Elastcty North Amerca Prce Elastcty Europe Asa Oceana North Amerca Europe Asa Oceana Expendture elastcty The expendture elastcty s postve n all regons, whch means that the expanson of Japanese outbound toursts expendture pushes up toursm demand. In Europe and Asa, the elastcty score s hgher than 1 n the short run, whch means that a 1% ncrease n Japanese toursts expendture leads to a greater than 1% ncrease n Japanese toursts demand to these countres. By contrast, the long-run values n these countres are lower than 1, whch means that a 1% ncrease n Japanese toursts expendture leads to an nsgnfcant change of less than 1%. pecfcally, the demand of Japanese toursts to Europe and Asa leads to greater short-term gans, but these effects break down n the long run. We see exactly the opposte effect n Oceana: the short-run elastcty s lower than 1, and hgher than 1 n long-run equlbrum. North Amerca shows dfferent trends: both elastctes are less than 1, whch means that the change of expendture has an nsgnfcant effect on the toursm demand to North Amerca. It s possble to forecast the toursm demand change that results from changes of toursts consumpton expendture (e.g., a decrease n GDP n Japan) by usng ths elastcty. In ths case, there wll be a short-term decrease n toursts to Europe and Asa. ubsequently, the toursm demand for Oceana wll decrease. By contrast, demand for North Amerca wll be less subject to changes of expendture, and the robustness s stronger than n other regons. 134

11 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), Own-prce elastcty The own-prce elastcty (the dagonal values n Table 3) s negatve n all regons, whch means that the ncrease of prces and exchange rate wth Japan wll decrease demand from Japanese toursts. The nterpretaton of the elastcty s the same wth expendture. For example, a 1% ncrease n relatve prces of Europe results n a decrease of 1.002% n Japanese short-term demand for toursm. However, n the long run, the rate of decrease wll rebound to 0.442%. Asa ndcates the same trend as Europe. Oceana shows exactly dfferent trends wth Europe and Asa. North Amerca s less subject to changng of ther own-prce. Because of the nfluence of the hgh yen, the number of Japanese who travel abroad recently has been ncreasng. Consequently, although prce changes wll have a greater mpact on short-run demand for Europe and Asa, ths mpact wll decrease n the long run. Cross-prce elastcty The own-prce elastcty values are hgh relatve to those of the cross-prce elastcty (the off-dagonal values n Table 3). These values ndcate the senstvty of demand for each destnaton to an ncrease n prce relatve to those of ts compettors. For example, n the long run, the results ndcate that a 1% ncrease n prce n Oceana results n a decrease of 0.966% n Japanese demand for North Amerca, an nsgnfcant change n demand for Europe, and an ncrease of 0.621% n demand for Asa. From the dfference of sgn of elastcty, n the short run, the decrease n prce n Oceana results n a decrease n Japanese toursm demand to North Amerca, but t ncreases demand to Europe and Asa. Ths means that Oceana/North Amerca have a gross substtuton relatonshp, and Asa/Europe/Oceana have a gross complementary relatonshp (Fgure 4). Ths relatonshp wll change n the long run; almost all cross-prce elastctes wll be mnus, and the prce decrease wll ncrease Japanese toursm demand to almost all regons. Only Oceana ndcates a dfferent a trend, wth the decrease n prce n Oceana decreasng Japanese toursm demand to Asa. There s thus a gross complementary relatonshp between Asa and Oceana. Comparng the short and the long run, the long-run elastcty values are hgher than the short-run values, whch means that the changng prces of other regons wll ncrease year by year. In addton, some regons have dfferent sgns between the short and the long run. For example, there s a gross complementary relatonshp (elastcty < 0) n the short run between Asa and Oceana, but t s one of gross substtuton (elastcty > 0) n the long run. Thus, attenton must be pad to sgnfcant changes n nterregonal relatonshps. 4.2 Results of Inbound Toursm Parameter estmaton The estmaton results of parameters are shown n Table 4. As wth the outbound analyss, there are some ssues here regardng model accuracy, but we use these parameters to calculate elastctes by way of a tral mplementaton; the elaboraton of the model structure and the selecton of varables reman topcs for future study. The adjustment perod to long-run equlbrum ( 1 / ) s 42.7 years, whch s longer than the outbound value (3.4 years). 135

12 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), North Amerca Prce Europe Prce Cross-prce elastcty ~0.1 Prce 0.1~ ~1.0 Asa 1.0~ ubsttuton-complementarty : Gross substtuton Prce Oceana : Gross complementarty Fgure 3. Interregonal substtuton-complementarty relatonshps (Outbound / hort-run). North Amerca Prce Europe Prce Cross-prce elastcty ~0.1 Prce 0.1~ ~1.0 Asa 1.0~ ubsttuton-complementarty : Gross substtuton Prce Oceana : Gross complementarty Fgure 4. Interregonal substtuton-complementarty relatonshps (Outbound / ong-run) 136

13 ong-runp Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), Table 4. Estmated Parameter (Inbound) R 2 DW 1.North Amerca estmate E t-stat ** ** ** ** * 2.Europe estmate E t-stat 3.Asa estmate E t-stat ** ** ** 4.Oceana estmate E t-stat hort-run R 2 DW 1.North Amerca estmate E t-stat ** 2.Europe estmate E t-stat 3.Asa estmate E t-stat ** 4.Oceana estmate E t-stat NOTE: 1) estmate: estmated parameter, E: standard error, t-stat: t-statstc. 2) R 2 : coeffcent of determnaton, DW: Durbn-Watson statstc. 3) +, * and ** denote acceptance at the 10%, 5% and 1% sgnfcance levels respectvely. 137

14 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), Elastctes As wth outbound demand, the effects of the dfferent varables on foregn toursts demand to Japan are ndcated by the elastcty values (Table 5). Table 5. Expendture, own-prce, and cross-prce elastctes (Inbound) hort-run Prce Elastcty Expendture Orgn Elastcty North Europe Asa Oceana Amerca North Amerca Europe Asa Oceana Orgn Expendture Elastcty North Amerca ong-run Prce Elastcty Europe Asa Oceana North Amerca Europe Asa Oceana Expendture elastcty The expendture elastcty values are postve n all regons, whch means that the ncrease n expendture of foregn toursts to Japan results n an ncrease n each regon s toursm demand to Japan. Especally n Asa, the elastcty s relatvely hgh (hort-run; and ong-run; 1.561), whch means that the expanson of Asan toursts expendture wll have a large mpact on ncreasng toursm demand to Japan. Because of the recent economc growth n Asan countres, foregn toursts expendture wll ncrease, and ths growth may expand toursm demand to Japan. In Europe and Oceana, the mpact of an ncrease n expendture n each regon s nsgnfcant n the short term, but sgnfcant n the long run. For North Amerca, the mpact of a change n expendture s less than n other regons. Own-prce elastcty The own-prce elastcty values are negatve n all regons. However, comparng the short and the long run, the trend dffers between Asa and other regons. Asan demand s prce nelastc n the short run, but t changes to prce elastc n the long run, whch shows that Asan demand s more greatly affected by an ncrease n relatve prce nearng equlbrum. Other regons ndcate a smlar trend n the short term, but an ncrease n relatve prce results n nsgnfcant effects on demand n the long run. 138

15 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), For example, f the trend of the hgh yen contnues n the future, travel demand to Japan s unlkely to vary by regon n the short run; however, demand from Asan toursts may decrease n the long run. Cross-prce elastcty As wth the general trend, the cross-prce elastcty values are almost zero n the short run but these values wll ncrease wth tme. A smlar trend s seen as n the outbound analyss. However, short-run Asan elastcty dffers from other regons. Asan toursm demand to Japan s reslent for a relatve prce change n Oceana ( 1.333). Ths value s hgher than the Asan own-prce elastcty value ( 0.980) and there s a strong gross complementary relatonshp. However, n the long run, almost all regons wll be gross complementary (Fgures 5 and 6). North Amerca Prce Europe Prce Cross-prce elastcty ~0.1 Prce 0.1~ ~1.0 Asa 1.0~ ubsttuton-complementarty : Gross substtuton Prce Oceana : Gross complementarty Fgure 5. Interregonal substtuton-complementarty relatonshps (Inbound / hort-run) 5. CONCUION AND FUTURE TUDY 5.1 Conclusons Each regon s toursm demand structure s unque. Therefore, t s very mportant to promote toursm polces that take ths demand structure n each regon nto consderaton. In ths study, the worldwde Japanese demand for toursm and foregn toursts demand for Japan have been examned usng the long-run statc and the short-run Dynamc AID model. Our fndngs provde us wth basc nformaton wth regard to promotng nternatonal toursm. ome drectons for future applcaton to polcy analyss can also be proposed. Frst, based on ths model, we can estmate changes n toursm demand that s affected by economc factors (e.g., the contracton of GDP n Japan, the contnung strong yen, economc growth n foregn countres). Ths wll help n takng a proactve approach to promotng toursm or n controllng the declne n tourst numbers. In addton, we can 139

16 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), consder the tme lne by usng ths model, whch means that we not only calculate elastctes n long-run equlbrum, but also n the adjustment process to equlbrum. We should consder polces that are adapted to each perod. North Amerca Prce Europe Prce Cross-prce elastcty ~0.1 Prce 0.1~ ~1.0 Asa 1.0~ ubsttuton-complementarty : Gross substtuton Prce Oceana : Gross complementarty Fgure 6. Interregonal substtuton-complementarty relatonshps (Inbound / ong-run) econd, these results not only apply to external polces (e.g., concentraton on the regon whch should do aggressve sales actvtes or control the declne n toursts) but also to domestc polces. For example, ths study provdes us wth basc nformaton to be consdered for recevng foregn toursts. Thrd, as prevously explaned, nternatonal toursm demand s affected by prce change not only n the home regon and partners, but also n thrd regons. To estmate future toursm demand n greater detal, we need to examne the substtuton and complementary relatonshps between each regon, and smulate effects n the case of prce change occurrng n one regon. Fnally, we would lke to apply ths study to polcy analyss. The development of nbound toursm currently provdes greater ncentves for the Japanese economy than does outbound toursm. Thus, we can take nbound toursm as an example of the applcaton to polcy analyss. As seen n the results of nbound analyss, Asan ncome growth wll promote toursm demand to Japan n the short run. Therefore, Japan should target Asan toursts n the short term. However, n the long run, almost all regons wll develop gross complementary relatonshps, whch means that the decrease of relatve prce wll ncrease toursm demand n all regons. Thus, Japan should plan to meet the expected long-term demand from across the world. 5.2 Future tudy There reman a number of ssues for future work n order to mprove ths study. Frst, some 140

17 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), model statstcs (t-statstcs, DW-statstcs, and R 2 ) are statstcally unwarranted; explanatory varables should be revewed. econd, although the correlaton between objectve varables and explanatory varables n the AID model was clarfed, we do not understand clearly the cause and effect relatonshp between these varables. Cauton should therefore be appled n the nterpretaton of the study fndngs. Thrd, n ths study, the world s dvded nto four regons because of data lmtatons. Ths approach evdently provdes a macroscopc vewpont for analyss of detaled polcy makng; thus, future analyss should deal wth smaller zones. In addton, as prevously mentoned, there s an nherent problem of consstency wth the nbound analyss n the AID model. Because of data avalablty, we carred out tral calculatons despte ths ssue, but the model structure should obvously be revewed n future study. Fnally, agan because of data lmtatons, the toursm demand structure was estmated by pooled data, whch contaned all-purpose overseas trps. However, the demand structure may be dfferent by regon. For example, the prce elastcty may be qute dfferent between sghtseeng trps and those for busness purposes. We have no data on trp purpose n outbound toursm. For nbound toursm, such data may be gathered for each regon from mmgraton statstcs, and these data ndcate consderable varablty across regons, calculated as a rato of toursts (sghtseeng purpose) to the total number of vstors to Japan: Asa: 80%, Europe: 61%, North Amerca: 50%, and Oceana: 70%. To elaborate ths model, the dsaggregaton of trp purpose wll be essental. REFERENCE Australan Bureau of tatstcs (2011). Overseas Arrvals and Departures ( Accessed Nov. 1, 2011). (n Japanese) Blundell, R., Brownng, M. (1994). Consumer demand and the lfe-cycle allocaton of household expendtures. Revew of Economc tudes, 61, Chang, C. C., Khamkaew, T., McAleer, M. (2012). Estmatng prce effects n an almost deal demand model of outbound Tha toursm to East Asa. Journal of Toursm Research & Hosptalty, 1 (3). (Onlne: do: / ) Choo,., ee, T., Mokhtaran, P.. (2007). Do transportaton and communcatons tend to be substtutes, complements, or nether? U.. consumer expendture perspectve, Transportaton Research Record, 2010, Deaton, A., Muellbauer, J. (1980). An almost deal demand system. The Amercan Economc Revew, 70(3), Durbarry, R. (2002). ong Run tructural Toursm Modelng: An Applcaton to France. Toursm and Travel Research Insttute, Unversty of Nottngham, Unted Kngdom. Durbarry, R., nclar, M.T. (2003). Market shares analyss -The case of French toursm demand-. Annals of toursm research, 30(4), Eakns, J.M., Gallagher,.A. (2003). Dynamc almost deal demand systems: An emprcal analyss of alcohol expendture n Ireland. Appled Economcs, 35 (9), Japanese Mnstry of and, Infrastructure, Transport and Toursm ( ). Whte paper on Toursm. (n Japanese) Japanese Bureau of Immgraton (2010). Immgraton tatstcs ( touke/touke_chran_nyukan.html; Accessed Nov. 5, 2010). (n Japanese) 141

18 Koke A., Yoshno D. / Asan Transport tudes, Volume 3, Issue 1 (2014), Japanese Bureau of tatstcs (2011). Internatonal tatstcal Drectory, (Accessed Nov. 1, 2011). (n Japanese) Japanese Bureau of tatstcs (2011). World tatstcs ( Accessed eptember 10, 2011). (n Japanese) Japanese Bureau of tatstcs (2006). The New Japan Hstorcal tatstcs st. (n Japanese), G., ong, H., Wtt,. (2010). Modelng toursm demand: A dynamc lnear AID approach. Journal of Travel Research, 43(2), oeb, P.D. (1982). Internatonal travel to the Unted tates: an econometrc evaluaton. Annals of Toursm Research, 9, Mello, M.D., Pack, A., nclar, M. T. (2002). A system of equatons model of UK toursm demand n neghborng countres. Appled Economcs, 34, hephard, R.W. (1970). Theory of Cost and Producton Functons. Prnceton Unversty Press. ong, H., Romlly, P., u, X. (2000). An emprcal study of outbound toursm demand n UK. Appled Economcs, 32, tone, R. (1954). The Measurement of Consumers Expendture and Behavor n the Unted Kngdom, Volume 1, Cambrdge At the Unversty Press. Takushoku Unversty Asan Informaton Center (2006). East Asa Hstorcal Economc tatstcs, Vol.1 (Korea), Keso hobo. (n Japanese) Uysal, M., Crompton, J. (1984). Determnants of demand for nternatonal toursm flows to Turkey. Toursm Management, 5, Wtt, C., Wtt,. (1995). Forecastng toursm demand: A revew of emprcal research. Internatonal Journal of Forecastng, 11, World Bank (2011) Accessed Nov. 1, Zellner, A. (1962) An effcent method of estmatng seemngly unrelated regressons and tests for aggregaton bas. Journal of the Amercan tatstcal Assocaton, 57(298),