Do shocks have permanent or transitory effects on tourist inflow? An application of stationarity test with structural breaks: evidence reexamined for Gilgit-Baltistan, Pakistan

ABSTRACT

Do shocks affect tourist inflows permanently or temporarily? To examine this question, we consider a region in Northern Pakistan, Gilgit-Baltistan, known for its natural and scenic beauty and with a history of huge tourist inflows, both domestic and international. The tourist arrivals from significant source markets are investigated using univariate and Lagrange Multiplier (LM) unit root tests with two structural breaks to examine if shocks to the time path of visitors’ inflow are permanent or transitory. According to the results, the univariate and LM unit root test with two breaks reject the unit root null for all major source markets. The findings suggest transistory effects rather than permanent effects of shocks on the growth path of tourist arrivals to Gilgit-Baltistan. This result further predicts the sustainability of the tourism sector in the region in the long run.

KEYWORDS:

• Tourist arrival
• seasonality
• time series
• unit root
• developing economy
• Gilgit Baltistan
• sectarian attacks
• financial crises
• spectral density
• destination

JELS CLASSIFICATION:

• C52
• C24

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Saranjam Baig http://orcid.org/0000-0003-2407-3776

Hamid Hussain http://orcid.org/0000-0002-8519-7556

Notes

1 CPEC is a multi-billion investments agreement between China and Pakistan that aims at connecting Kasghar in Western China to Gwadar in south of Pakistan.