Examination of Taiwan's travel and tourism market cycle through a two-period Markov regime-switching model

This study analyzes the Taiwan travel and tourism (T&T) market cycle. According to data of the weighted Taiwan tourism stock index from January 1997 to August 2015, the two-period Markov regime-switching model identifies two distinct regimes of the T&T cycle and incorporates a specific set of mean and variance parameters for each period to control for the structural changes in Taiwan's T&T market. The effect of China visitor arrivals to Taiwan on the T&T market is also verified. The empirical findings offer essential information and policy implications for Taiwan's government tourism policymakers and business managers.