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This study aims to explore the role of cultural distance, economic integration, price competitiveness and substitution prices for tourism arrivals between 10 Southeast Asian (ASEAN) countries and 22 other origin countries from 2007 to 2019.

A panel-data gravity model is applied to estimate tourism demand in the ASEAN region. An index of cultural distance (time-variant) is introduced to examine the role of cultural differences across bilateral partners. Moreover, relative prices and substitution prices are introduced to the gravity equation to estimate price elasticities. Finally, this study tested whether the ASEAN free trade agreements (FTAs) encourage intraregional tourism arrivals. Two-panel regression approaches are used to test the model.

Cultural distance positively affects tourism inflows, boosting foreign arrivals. Income and price elasticities are important determinants in the demand model for ASEAN. A gain in price competitiveness versus alternative destinations can lead to substitution in destination choice. Meanwhile, geographic distance has a negative impact on arrivals, suggesting that connectivity and transportation are key in boosting tourism inflows in ASEAN. A decline in the disposable incomes of tourists caused by the COVID-19 pandemic may reduce tourism arrivals in the region. However, when currencies in ASEAN weaken, and consumer prices are lower than in other destinations, arrivals in ASEAN will be stimulated. FTAs have facilitated travel intra-ASEAN, which is an advantage over the extra-ASEAN sector.

Cultural heritage could be used in tourism promotion as ASEAN can attract tourists seeking novelty and new excitements. ASEAN countries could create complementary destinations and jointly promote cultural heritage to accelerate the region’s recovery. The depreciation of currencies in ASEAN and the gain in relative price competitiveness could attract more tourist visits, helping the region reestablish tourism activities in a postpandemic economy.

The model accounts for three key variables in the gravity approach: cultural distance in ASEAN tourism inflows, the effects of the ASEAN economic community on intraregional tourism, and relative and alternative price competitiveness. This study enriches the literature about tourism-demand approaches in modeling tourism arrivals.

This paper aims to examine whether Indonesian cross-border trade responds asymmetrically to exchange rate volatility (ERV).

An exponential generalized autorgressive conditional heteroscedasticity model is applied to estimate the ERV of Indonesia and ten main trade partners using quarterly data from 2006 to 2020. A nonlinear autoregressive distributed lag estimation is applied to estimate the impact of ERV on cross-border trade. Impacts from the global financial crisis (GFC) of 2008 and the COVID-19 pandemic are covered. Dynamic panel data is used for the robustness test.

In the short-run, ERV significantly affects exports to most of the top partners (positively, negatively or both). In the long run, asymmetric effects occur in Indonesia’s exports to five top destinations. The weakening of the Indonesian Rupiah mainly supports exports in the short term. Imports from top partners are also affected by ERV in both the short run and, to a lesser extent, in the long run. Both the GFC and the COVID-19 pandemic reduced trade: for most cases, in the short run. The dynamic panel model suggests that ERV has asymmetric impact on cross-border trade in the long run.

Exchange rate strategies need to avoid a single-side policy approach and, instead, account for exporter and importer differences in risk behaviour and an asymmetric response to ERV in trade. Policymakers need to consider policies that stabilise the currency.

This study provides evidence that cross-border trade can react asymmetrically to the exchange rate uncertainty and that the impacts of real ERV are asymmetric as well. The authors also apply a dynamic panel that signals that ERV matters in the long run for Indonesian trade with top partners.