International Information Disparity, Sticky Information, and Economic Behavior: Tourist's Response to Region-Specific Shocks

TGU-ECON Discussion Paper Series #2021-2

26 Pages Posted: 8 Jul 2021

See all articles by Yoshito Funashima

Yoshito Funashima

Tohoku Gakuin University

Kazuki Hiraga

Nagoya City University

Date Written: July 5, 2021

Abstract

This study investigates how region-specific shocks affect international behavior of individuals when information is partially or scarcely spread across the border. We use both local and international tourist data pertaining to Hakone in Japan, to focus on two exogeneous region-specific shocks of natural disasters: the Great East Japan Earthquake and volcanic activity on Mount Hakone. Hotel guests' response to these shocks is estimated by smooth local projections. We find that the responses of less-informed foreign guests are different from those of domestic well-informed guests. Because of insufficient and sticky information, the Great East Japan Earthquake and its aftermath lead to a decrease in the number of foreign guests at a rate greater and more persistently than domestic guests. Conversely, because of the absence of information, changes in volcanic alert levels have no impact on foreign guests, but they have negative and persistent effects on domestic guests.

Keywords: International information disparity, International behavior, Region-specific shocks, Smooth local projections, Sticky information

JEL Classification: D80, F20, F62, Z30

Suggested Citation

Funashima, Yoshito and HIRAGA, KAZUKI, International Information Disparity, Sticky Information, and Economic Behavior: Tourist's Response to Region-Specific Shocks (July 5, 2021). TGU-ECON Discussion Paper Series #2021-2, Available at SSRN: https://ssrn.com/abstract=3880890 or http://dx.doi.org/10.2139/ssrn.3880890

Yoshito Funashima (Contact Author)

Tohoku Gakuin University

1-3-1 Tsuchitoi, Aoba-ku
Sendai, Miyagi 980-8511
Japan

KAZUKI HIRAGA

Nagoya City University ( email )

1 Yamanohata, Mizuhocho
Mizuho-ku
Nagoya city, 4678501
Japan
+819055631569 (Phone)

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