New Forecasting Models

Abstract

Tourism forecasting plays an important role in tourism planning and management. Various forecasting techniques have been developed and applied to the tourism context, amongst which econometric forecasting has been winning an increasing popularity in tourism research. This article therefore aims to introduce the latest developments of econometric forecasting approaches and their applications to tourism demand analysis. Particular emphases are placed on the time varying parameter (TVP) forecasting technique and its application to the almost ideal demand system (AIDS). The discussions in this article fall into two main parts, in line with the two broad categories of econometric forecasting approaches: the first part refers to the single-equation forecasting techniques, focusing particularly on both long-run and short-term TVP models. The second part introduces the system-of-equations forecasting models, represented by the AIDS and its dynamic versions including the combination with the TVP technique, which will be discussed one by one following the order of methodological developments.

Key Words:

• Forecasting Models
• Time Varying Parameter (TVP)
• Almost Ideal Demand System (AIDS)