Assessing Whether Tourist Arrivals are Stationary: Evidence from Taiwan using Sequential Panel Selection Method

This study applied the Sequential Panel Selection Method (SPSM) procedure proposed by Chortareas and Kapetanios (2009) to test the non-stationarity of long-run tourist arrivals to Taiwan for a sample of six main visiting countries from 1970 to 2010. This Panel KSS test (Ucar & Omay, 2009) with a Fourier function for the SPSM procedure considers both structural breaks and non-linear adjustment and, thus, more powerfully determines whether tourist arrivals are stationary compared to conventional unit root tests. The empirical results of the first and the second generations are mixed; however, when the nonlinear panel unit root test with a Fourier function for the SPSM procedure is conducted, evidence indicates that the series of tourist arrivals to Taiwan are trend stationary except Korea.