Panel threshold analysis of Taiwan's outbound visitors

- Panel threshold effect of consumer prices in destination countries
- On the number of Taiwanese outbound visitors that comprises 196 observations
- Findings suggest the absence of any significant panel threshold effect.
- A destination country's CPI has positive linear relation with the number of Taiwanese people traveling abroad.

The main purpose of this research is to explore the panel threshold effect of consumer prices in destination countries on the number of Taiwanese outbound visitors. It is assumed that a destination country's inflated prices contain one or more threshold values and have nonlinear relation with the number of Taiwanese people visiting that particular country, with asymmetric upper and lower boundaries. Scrutinizing 14 countries during a 14-year period (from 1998 to 2011), this study examines the panel threshold effects based on balanced panel data that comprises 196 observations. The empirical findings suggest the absence of any significant panel threshold effect, regardless of the assumed double or single threshold effect. According to an ensuing inter-segment symmetry analysis, impact factors within the range of study invariably indicated significantly positive relations, a sign that a destination country's consumer price index (CPI) has a positive linear relation with the number of Taiwanese people traveling abroad. In other words, the rising prices in destination countries do not reduce Taiwanese people's demand for traveling abroad. Instead, it reflects the improving economy as well as surging quality of life in a destination country that encourages refinement of products, perfects traveling facilities, and consequently lures quality-seeking tourists as well as Taiwanese outbound visitors. The finding gives a clear guidance that Taiwan's tourism policy shall add sophistication to services in every aspect.