The Effect of Terrorism on Tourism Demand in the Middle East

This paper uses a seemingly unrelated regression model (SUR) to test the individual effects of domestic and transnational terrorism on tourism demand to Lebanon, Turkey and Israel over the period 1995-2007. Tourism demand is measured by the logarithm of the number of arrivals to each country. More-over, this paper tests whether tourism depends on the magnitude of the terrorist attacks by disaggregating terrorism into three levels of intensity - low, medium and high. The results show significant own and spillover effects for domestic and transnational terrorism on tourism demand to each of the three selected countries. In addition, the results show that the effect of terrorism on tourism depends on the intensities of the terrorist attacks.