Research note: Long-lasting effects and welfare costs of fluctuations

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The tourism industry is growing rapidly but is also highly fluctuating. Using China's inbound tourism market as the object and based on the B–N data decomposition theory, this paper adopts the statistics of variance ratio to measure the long-lasting effects of stochastic fluctuations on China's inbound tourism industry. It also discusses the influences of stochastic fluctuations and the decreasing growth rate on the welfare of China's inbound tourism. The conclusion is that undoubtedly China's inbound tourism industry will continue to grow, but the impact of stochastic shocks will endure for a relatively long time. Twenty-four per cent of the long-term fluctuation of China's inbound tourism industry is the result of stochastic shocks, whose effect, in the short term, will continue to be reinforced. Though the elimination of fluctuations will increase welfare by 0.40%, lowering the growth rate will decrease welfare by a larger percentage. If the monthly growth rate decreases by 0.1%, welfare will fall by about 19.37%, 48 times the amount of welfare loss without fluctuation. Therefore, China's inbound tourism business should stick to the long-term policy of facilitating growth, while some administrative and legislative measures should be taken to address the negative impact of stochastic fluctuation appropriately.


Document Type: Research Article


Publication date: August 1, 2011

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  • Tourism Economics, published bimonthly, is a peer-reviewed journal devoted to the economics and finance of tourism worldwide. Articles address the components of the tourism product (accommodation; restaurants; merchandizing; attractions; transport; entertainment; tourist activities); and the economic organization of tourism at micro and macro levels (market structure; role of public/private sectors; community interests; strategic planning; marketing; finance; economic development).

    Fast Track. Tourism Economics Fast Track papers have been peer-reviewed, revised and fully accepted for publication. However, although these are the final versions from the authors, they are unedited manuscripts and will undergo a rigorous editing process before their appearance in an issue of the journal. This means that the Fast Track manuscripts may not conform to journal style in terms of presentation, spelling and other usages. They may also contain errors of typography, grammar, spelling, referencing, etc, all of which will be corrected in the processes of copy-editing and proofreading.
    Tourism Economics operates a Fast Track online publication system so that papers can be published and made available almost immediately on final acceptance by the journal. Each Fast Track article is given a DOI. When the paper is assigned to an issue, this DOI will automatically be transferred to the article in the journal issue.
    Fast Track articles may be cited using the DOI. Citations should include the author's or authors' name(s), the title of the article, the title of the journal followed by the words Fast Track, the year of Fast Track publication and the DOI. For example:

    Smith, J. (2013), Article title, Tourism Economics Fast Track, DOI xxxxxxxx.

    Once the paper has been published in an issue of the journal, the DOI will automatically resolve to that final version and the article can be cited in accordance with normal bibliographical conventions.

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