Tourism Development and Real Effective Exchange Rate Revisited by Wavelet based Analysis: Evidence from France

Research Article

This research scrutinizes the empirical association of tourism development (TD) and real effective exchange rate (ER) in the high tourist arrival economy; France by wavelet transform context. This innovative technique allows the decomposition of time-sequence at diverse time frequencies. We applied continuous wavelet, wavelet coherence power spectrum and wavelet based Granger causality analysis to explore the connection between TD and ER, by using the monthly data from 1996 (1) -2015 (8). Outcomes show that there is a unidirectional causal impact from TD to ER in short run and also a bidirectional causal influence of TD on ER in medium and long run in France. Thus, it can be recommended that government needs to increase and promote tourism demand and further nurturing and providing the expansion of tourism resources.

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