An econometric analysis of tourism in Spain: implications for the sectoral study of exports and some economic policy considerations

This paper deals with the construction of econometric models to explain the external demand for Spanish tourist services. The models include as explanatory economic variables a tourist income index and two real exchange rate indices, one with respect to client countries and the other with respect to competitor countries. The results obtained : a) support the hypothesis that the decision to expend on tourism is made in two stages with different price and income elasticities in each of them; b) show that the recent drop in demand is due to a -real exchange rate effect. With the models constructed it is possible to evaluate to what extent the drop in demand is due purely to the effect of prices and to 'what extent it is determined by exchange rate movements. The latter have had an important effect, so that a policy of appreciating the peseta indeed has different sectoral effects. This different sectoral effect, as well as the importance of distinguishing between client countries and competitors, suggest that economic policy must not be based on just one index of the effective exchange rate of the peseta but on several