The Tunisian Tourism Business: What We Learn About The European Demand?

Abstract

People from European countries are traditionally the most important sources of tourism for Tunisia. The aim of this paper is to analysis the European tourism demand for Tunisia. we propose a vector autoregression error correction model. The following methodology allows us to analysis the dynamic of Tunisian tourism in both short-term and long-term. Our main results show that the real exchange rate is an important factor explaining long-term overnight stays. A currency depreciation of 10% will increase the number of nights spent by visitors by 12% in the long term, but will have the opposite effect in the short term. However, we show that tourism demand is inelastic to income, indicating the low-cost nature of Tunisian tourism.