Does the Value of Currency Affect the Numbers of International InboundTourists to Turkey?

Abstract

This study examined the effect of the value of the currency on international inbound tourist numbers toTurkey from Germany and Russia, which are the top two tourist generating countries for Turkey. Two differentTurkish Lira regimes are investigated with Threshold Vector Autoregressive (Threshold-VAR) models, using thereal broad effective exchange rate for Turkey as a threshold variable. The endogenous variables vectors are themacroeconomic variables of the tourist origin countries: the real broad effective exchange rate, consumer priceindex ratio (proxying for the price level), and total industry production (proxying for income level) for Germanyand Russia. Because of data constraints, the estimated Threshold-VAR models for Germany and Russia covereddifferent periods in 1997:01-2020:05 and 2000:01-2020:05, respectively. The key finding for both policymakersand tourism researchers is that when travels become cheaper in the Turkish Lira, this does not always attractmore foreign tourists to Turkey.