Air Passenger Flows: Evidence from Sicily and Sardinia

Tourism plays an important role in the economies of many mediterranean countries, since it is a crucial driver of economic growth, job creation, and income. For this reason many countries set up a wide variety of programs and policies to support the development of this economic sector. It is therefore very important, for scholars and policy makers, explaining and forecasting tourism demand. Using air passenger flows as proxy variables for tourist arrivals, we set up some VAR model specifications in order to investigate the monthly time series 2003-2008 of arrivals to the most important Italian islands, Sardinia and Sicily. Our results show a significant inter-temporal relationship among tourism flows. Furthermore, our findings reveal that both meteorological variables (atmospheric temperatures and raining days) and exchange rates (Dollar-to-Euro and Yen-to-Euro) can improve the explanatory and forecasting power of VAR models.