Estimation of outbound Italian tourism demand: a monthly dynamic EC-LAIDS model

An almost ideal demand system with monthly frequency, in both
long-run and dynamic forms, is used to quantify the responsiveness
of Italian tourism demand to changes in relative prices, exchange
rates, expenditure and unexpected one-off events in four main
European destinations. Short-term elasticities, which are crucial for
policies regarding own price, as well as cross prices and expenditure
elasticities are derived from the dynamic model. It is also found that
the dynamic model outperforms the long-run model in forecasting
accuracy. This paper provides useful information for policymakers to
maintain high market shares of Italian tourism demand.