The long-run impact of exchange rate regimes on international tourism flows

• Investigation of impact of exchange rate regimes on international tourism flows.
• Application of SYS-GMM estimation on a panel of 27 countries over 1980–2011.
• Multiple exchange rate regime effects are found.
• Findings support the importance of maintaining a relatively stable exchange rate.

Notwithstanding the systematic inclusion of an exchange rate variable of some form in studies examining international tourism flows, hardly any research has been carried out to test for a possible exchange rate regime effect. Drawing from recent advances in exchange rate regime classifications, this paper begins to fill this gap by investigating the impact of exchange rate regimes on international tourism flows. The study employs a system generalized methods of moments (SYS-GMM) estimation for tourist arrivals on a panel of 27 Organization for Economic Co-operation and Development (OECD) and non OECD countries for the period 1980–2011. The results identify multiple exchange rate regime effects and support the importance of maintaining a relatively stable exchange rate to attract international tourist arrivals.