Open AccessModelling International Tourist Arrivals Volatility in Zimbabwe Using a GARCH Process
Author(s) -
Tendai Makoni,
Delson Chikobvu
Publication year - 2021
Publication title -
african journal of hospitality, tourism and leisure
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.232
H-Index - 11
ISSN - 2223-814X
DOI - 10.46222/ajhtl.19770720-123
Subject(s) - tourism , volatility (finance) , autoregressive conditional heteroskedasticity , econometrics , currency , earnings , economics , financial economics , macroeconomics , finance , geography , archaeology
The aim of the paper was to develop bootstrap prediction intervals for international tourism demand and volatility in Zimbabwe after modelling with an ARMA-GARCH process. ARMA-GARCH models have better forecasting power and are capable of capturing and quantifying volatility. Bootstrap prediction intervals can account for future uncertainty that arises through parameter estimation. The monthly international tourism data obtained from the Zimbabwe Tourism Authority (ZTA) (January 2000 to June 2017) is neither seasonal nor stationary and is made stationery by taking a logarithm transformation. An ARMA(1,1) model fits well to the data; with forecasts indicating a slow increase in international tourist arrivals (outside of the Covid-19 period). The GARCH(1,1) process indicated that unexpected tourism shocks will significantly impact the Zimbabwe international tourist arrivals for longer durations. Volatility bootstrap prediction intervals indicated minimal future uncertainty in international tourist arrivals. For the Zimbabwe tourism industry to remain relevant, new tourism products and attraction centres need to be developed, as well as embarking on effective marketing strategies to lure even more tourists from abroad. This will go a long way in increasing the much-needed foreign currency earnings needed to revive the Zimbabwean economy.