The impact of exchange rate on domestic tourism demand of Iran

ABSTRACT

Tourism demand is influenced by many factors including price-related variables like exchange rate. This paper aims to examine the influence of the exchange rate increase on the domestic tourism demand of Iran. To this end, the social accounting matrix is modified to incorporate domestic tourism as a distinct sector, and is fed into a CGE model. The results show domestic tourism demand is decreased for all households after a 50% increase in the exchange rate. However, the export of many sectors is improved. Inbound tourism, proxied by hotel sector, is also increased. The consequences of the exchange rate increase are not homogenous in all sectors, and it is recommended to study all aspects in exchange rate policies.

KEYWORDS:

• Domestic tourism
• exchange rate
• computable general equilibrium model
• social accounting matrix
• Iran

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Fatemeh Rafiei

Fatemeh Rafiei received her PhD in Oil & Gas Economics from Allameh Tabataba’i University, Tehran, Iran. She is now an analyst at the Institute for Management and Planning Studies (IMPS) affiliated to the Presidential administration of Iran. Her research interests include Energy Economics and Applied Macroeconomics (Economic Growth and Development, General Equilibrium Modeling and Fiscal policies).

Niloofar Abbaspoor

Niloofar Abbaspoor received her MA and PhD in Tourism Management from Allameh Tabataba’i University, Tehran, Iran. She is an assistant professor at Kharazmi University, Tehran, Iran. Her research interests include tourism economics, tourism planning and development and sustainable tourism.