Friday, September 24, 2010

Is there a relationship between tourism and the value of the dollar worldwide? After viewing these graphs you make the call.

     The first graph below is from Carpe Diem  and shows the ups and downs of tourism for the last 12 years.  Professor Perry used this data to show an improvement over the last year in tourism spending (see the tail end of the data line to the far right).  In class right now we are covering the foreign exchange market and how appreciation and depreciation of the dollar can affect various interested parties.  The tourism industry depends not only on US consumers but foreign ones as well.  This got me to thinking: How does this graph compare with the value of the dollar over the same time span? See the second graph below BUT, in your mind, shift it over to the right a little bit to aline it with the graph above it.  Keep in mind, the downward slope of the line means the dollar is depreciating against a measured basket of other currencies and an upward slope means it is appreciating.  If the dollar depreciates in value, then US goods and services become relatively less expensive for foreigners. This assume their currency is one that appreciated in value relative to the US dollar.  US vacations become cheaper for foreigners OR they can purchase more vacation (stay more days, stay in fancier places, etc).  
Source: Carpe Diem


Source: HERE

I don't want to suggest that correlation is causation, but there seems to be a relationship.  The only thing left to do is to see, in real terms, if the increase in tourism is from foreign or domestic  sources.  Have you been to a National Park or DisneyWorld in the last few years, or decade? What do you think? Hmmm...
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