Research On RMB Exchange Rate Changes's On China's Inbound Tourism Demand Based On Panel Cointegration Model

The RMB real exchange rate has been showing a significant appreciation after the financial crisis. As the most direct and the largest weight economic variables influencing import and export trade, RMB exchange rate has a significant impact on China's service trade. Tourism accounte for a larger proportion in a country's trade in services, it plays an important positive impact for business activities, promoting economic development, international exchanges and other aspects. This paper selects the top 20 Chinese inbound tourism source nations as the research object, research how RMB exchange rate effect China inbound tourism demand of market segments.According to different travel motivations, this paper firstly divides Chinese inbound tourism market into five market segments:meeting business, tourism and leisure, visiting friends, service employees, the others. Then this paper builds panel cointegration model for each motive for examining whether there are cointegration relationships between inbound tourism RMB exchange rate, the relative price of tourism consumption, per capita GDP of source countries, transport costs and dependence on trade with the five market segments. And paper analyzes the relationship between RMB exchange rate and tourism demand using FMOLS parameter estimation method. On this basis, this paper further builds VEC model to analyze the long-term and short-term Granger causality between RMB exchange rate and the five segments of tourism demand.This paper discovers that there exist cointegration relationship between business meeting, tourism and leisure, service staff and the others with independent variables, while there is no cointegration relationship between visiting relatives and friends and with independent variables. Real RMB Exchange Rate has significant negative impact on tourism demands of tourism and leisure, service staff and visiting relatives and friends, no significant effect on tourism demand of business meeting and the others. Then this paper uses the panel Granger causality test to analyze the short-term and long-term real causality between exchange rate of RMB and five inbound tourism demands. The results show that there is significant that introduces current and historical changes of real exchange rate to the short-term forecasting inbound tourism demands of tourism and leisure, service staff and visiting relatives and friends, and we can improve the long-term forecasting capabilities of business meetings, tourism and leisure, services staff and the others inbound tourism demands by introducing the current and historical changes of real exchange rate.