The Influence of Crude Oil Prices Volatility, the Internet and Exchange Rate on the Number of Foreign Tourist Arrivals in Indonesia

Abstract

This paper seeks to examine the influence of crude oil prices volatility, the internet, and exchange rate on the number of foreign tourist arrivals in Indonesia. Using a time-series dataset from 1995 to 2018 and employing an autoregressive distributed lag (ARDL) model plus an error correction model (ECM-ARDL), our research shows that in the long run, the internet has a positive influence on the number of foreign tourist arrivals. Every 1% rise in the internet, the number of foreign tourist arrivals rises by 0.49%. However, crude oil prices volatility and exchange rates do not significantly affect the number of foreign tourist arrivals. In the short run, there is a negative influence of crude oil price volatility on the number of foreign tourist arrivals. Meanwhile, the exchange rate positively affects the number of foreign tourist arrivals, meaning that the appreciation (depreciation) of the IDR exchange rate against the USD causes the number of foreign tourist arrivals to go down (up).

The volatility spillover effect of macroeconomic indicators on inbound tourism in India

“…The same behaviour is witnessed both in the short and long run. The current study’s results contradict Millia et al (2020) and Al-Mulali et al (2020). Millia et al (2020) find no impact of crude oil volatility on the tourism demand in Indonesia from 1995 to 2018.…”

“…In addition, Kisswani et al (2020) find no significant impact of oil prices on tourism in case Finland. Millia et al (2020) find no connectivity between oil price volatility and TD in Indonesia using the ARDL model during 1995–2018. Pentelow and Scott (2010) find relatively insignificant adverse effects of a rise in the oil price volatility on tourism demand (mainly due to the increase in aviation fuel cost).…”

“…Surprisingly, we observe rare studies on oil price volatility and its impact on tourism volatility. A few studies are seen (Millia et al , 2020; Pentelow and Scott, 2010), but they make the minimal application of advanced volatility-based models such as BEKK GARCH and DCC GARCH to explore the required association of volatilities between them.…”

The Causal Relationship Between Fuel Consumption, Exchange Rates and Economic Growth in South East Sulawesi, Indonesia

“…Fuel (crude oil and natural gas) is a useful source of energy as raw material for industries: goods, electricity, and transportation (Viljoen, 1979;Adam et al, 2016;Millia et al, 2020). In order to grow their industries, each country needs crude oil and gas.…”

Effects of Crude Oil Prices Volatility, the Internet and Inflation on Economic Growth in Asean-5 Countries: A Panel Autoregressive Distributed Lag Approach

“…The crude oil price volatility is a measure of risk in crude oil investment and trade (Misra, 2018;Millia et al, 2020). High crude oil price volatility can be caused by fundamental market conditions (so, supply and demand imbalance) and speculative surprises by investors in the financial sector where crude oil is an underlying asset in derivatives trading.…”