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Research Letter

The macroeconomic contribution to foreign-exchange earnings from tourism in Taiwan

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Pages 1110-1115 | Received 20 Mar 2016, Accepted 21 Jun 2016, Published online: 04 Jul 2016
 

Abstract

The study uses a Markov-switching model (MSM) to investigate the relationship between foreign-exchange earnings from tourism and macroeconomic factors in Taiwan. The MSM decomposes foreign-exchange cycles into a high growth stage (HGS) and a low growth stage (LGS). The steady-state probability remains foreign-exchange earnings from tourism in the HGS and LGS are 0.7486 and 0.8631, respectively. The findings indicate that foreign-exchange earnings from tourism in Taiwan have a high tendency to stay in the LGS state and a low tendency to shift from the LGS state to the HGS state. Furthermore, the results show that macroeconomic factors in Taiwan can continuously affect foreign-exchange earnings from tourism in the HGS.

Notes

1 In 1956, the Taiwan Tourism Bureau started to record foreign-exchange earnings from tourism.

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