THE ROLE OF INSTITUTIONAL QUALITY AND ECONOMIC FORCES IN PHILIPPINE DOMESTIC TOURISM: EVIDENCE FROM THE ARDL BOUNDS TESTING APPROACH

Abstract

While traditional tourism studies often emphasize destination attractiveness and income, this research examined the role of institutional quality and macroeconomic determinants in driving domestic tourism expenditures in the Philippines from 2000 to 2023, using the Autoregressive Distributed Lag (ARDL) framework. The bounds test confirmed the existence of a long-run relationship between the variables. Long-run estimates revealed that the exchange rate, economic growth, and political stability have positive but insignificant effects, while regulatory quality has a negative effect. In the short run, however, the exchange rate and economic growth have positive and significant effects, while regulatory quality also has a positive but insignificant effect. Political stability had a negative yet insignificant effect on tourism expenditures. The error correction term (ECT) was negative and significant, indicating that the short-term deviation from the long-term was adjusted by 20.90% in the subsequent year. Post-estimation diagnostic results indicated that the residuals are normally distributed, not serially correlated, homoscedastic, stable, and correctly specified. The results provided policymakers with important insights for implementing more inclusive and sustainable tourism policies and programs