Asymmetric effects of real exchange rate on inbound tourist arrivals in Malaysia: An analysis of price rigidity

Abstract

Abstract Present research is sought to analyse asymmetrical effects of exchange rates and income of tourists on tourist arrivals in Malaysia. A non‐linear model has been formulated to examine symmetrical and asymmetrical effects of exchange rate quarterly data from year 2000 to 2017. Results have revealed that both depreciation and appreciation of domestic currency value lead to a decrease in number of inbound tourist arrivals at long run. Moreover, it is found that price rigidity in Malaysian tourism sector may influence decision of tourists to select alternative destination. Besides, reduction in the real‐effective exchange rate does not have adverse effect in the long run.