5th International Thematic Monograph – Modern Management Tools and Economy of Tourism Sector in Present Era

ARE THE MEDITERRANEAN COUNTRIES WITH TOURISM PRICE INDICES IN THE PURCHASING POWER PARITY ZONE?

Jani Bekő  –   University of Maribor, Faculty of Economics and Business, Razlagova 14, 2000 Maribor, Slovenia
Darja Boršič –   University of Maribor, Faculty of Economics and Business, Razlagova 14, 2000 Maribor, Slovenia
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DOI:   ​​https://doi.org/10.31410/tmt.2020.107
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5th International Thematic Monograph –   Modern Management Tools and Economy of Tourism Sector in Present Era, Belgrade, 2020,   Published by:  Association of Economists and Managers of the Balkans in cooperation with the Faculty of Tourism and Hospitality, Ohrid, North Macedonia;   ISSN 2683-5673,  ISBN 978-86-80194-42-4;   Editors:   Vuk Bevanda, associate professor, Faculty of Social Sciences, Belgrade, Serbia;   Snežana Štetić, full time professor, The College of Tourism, Belgrade, Serbia,   Printed by:  SKRIPTA International, Belgrade
Abstract:   This chapter provides a detailed analysis of the validity of PPP for a cluster of 15 Mediterranean countries. The research has four original contributions. First, it uses two price indicators: a consumer price index for all items and a consumer price index for hotels and restaurants including catering and accommodation services. Second, it tests the exchange rate theory regarding two numeraire currencies. Third, due to the cyclicality of the tourism sector the study examines the significance of PPP by considering the impact of the Great Recession. Fourth, in order to test the mean reversion hypothesis, it uses a comprehensive set of panel unit root tests. The authors provide ample estimates in favour of PPP proposition. The evidence of mean reversion of real exchange rates is stronger (1) with price indices for hotels and restaurants, (2) in cases when the calculations are performed for EUR rates, and (3) for the post-Great Recession period.

Keywords:  Price competitiveness, Tourism sector, Panel unit root tests, Consumer price indices for
hotels and restaurants.

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