Tourism industry in Thailand has recently experienced several external shocks such as September 11 attacks, SARS outbreak, Bird Flu, Political unrest and the recent global financial crisis which may have a temporary or permanent impact on the number of visitor arrivals to the country. This paper conducts univariate and panel Lagrange Multiplier tests with a break proposed by Lee and Strazicich (2004) and Im, Lee, and Tieslau (2005) to identify the time of the structural break and to determine whether shocks to visitor arrivals to Thailand have a temporary or permanent impact. We use annual data for Thailand’s top ten source markets, Malaysia, Japan, Korea, China, United Kingdom, United States, Singapore, Germany, Taiwan and Hong Kong over the period of 1988-2006. Results from the univariate estimation models indicates that shocks have a temporary effect on visitor arrivals to Thailand from China, Hong Kong, Japan, Korea, Singapore and the US and thus Thailand’s tourism industry from these countries is sustainable in the long run. However, shocks have a permanent effect on tourism in Thailand from Germany, Malaysia, Taiwan and UK. The panel tests indicate that shocks have only a transitory effect on the number of visitor arrivals to Thailand.
Saleh, A. S., Ihalanayake, R. & Verma, R. (2010). Are external shocks permanent or transitory? An analysis of visitor arrivals to Thailand. Oxford Conference on Business & Economics (pp. 1-12). Oxford: Oxford University.