Exchange Rate Volatility : Effect on Turkish Tourism Incomes

The Turkish economy has been facing account deficit problems in recent years and tourism revenues play an important role in financing this deficit. Tourism revenues are affected by exchange rate volatility and the effects of exchange rate volatility on tourism revenues need to be researched. The purpose of this study is to examine the effects of exchange rate volatility on tourism revenues. These effects were analyzed by using multivariate co-integration model and monthly data from January 2003 to December 2011. Findings suggest that exchange rate volatility has a negative effect on tourism revenues. Additionally, a weak relationship was detected in the long term between exchange rate and tourism revenues