A Seasonal ARIMA Model of Tourism Forecasting: The Case of Sri Lanka

Many scholars have attempted to forecast the tourist arrival series in different countries. The aim of this paper is to find a suitable SARIMA model to forecast the international tourist arrival to Sri Lanka. Monthly data of tourist arrival from January 1995 to July 2016 is used for the analysis. Seasonality in the data series is identified using the HEGY test. The Root Mean Squared Error (RMSE), Mean Absolute Error (MAE), Mean Absolute percent Error (MAPE) are used to measure the forecasting accuracy. The result shows that the SARIMA (1, 0, 16) (36, 0, 24)12 model is suitable to forecast the tourist arrival in Sri Lanka. Keywords: Tourist Arrival, SARIMA model, HEGY test, Forecasting accurac

DETERMINANTS OF INTEREST RATES: THE CASE OF SRI LANKA

Many studies have looked in to the determinants of interest rate in developed countries. The objective of this paper is to examine the determinants of interest rates in Sri Lanka. The model employed in this study is based on the framework developed in Edwards and Khan (1985) and a few modifications suggested in Cavoli (2007), Cavoli and Rajan (2006), Berument, Ceylan and Olgun (2007) and Zilberfarb (1989). The model nests the interest rate parity theory, liquidity preference theory and the Fisher hypothesis augmented with inflation uncertainty. We employ Autoregressive Distributed Lag (ARDL) approach to capture long-run relationships among the variables involved. Quarterly data from 2001:1 to 2012:2 has been used. There are a few important findings. First, there is no evidence for inflation uncertainty in Sri Lanka during the sample period concerned. Second, the ARDL bound testing approach suggests that there is no long-run impact of the national income, money supply, inflation, foreign interest rates and net foreign assets on the domestic interest rate. Third, apart from the interest rate parity conditions, neither the liquidity preference theory nor Fisher effect is useful in explaining short-run interest rate changes in Sri Lanka during the period in question.Keywords: Interest Rate, Liquidity Preference Theory, Fisher Hypothesis, Interest Rate Parity, ARDL Bound Testing Approac