The effects of macroeconomic and weather conditions on the business cycle of Taiwan's adventure tourism

This paper utilises a Markov regime-switching model to explore the influences of macroeconomic and weather conditions on the business cycle of Taiwan's adventure tourism, that is, white-water rafting. The number of rafting participants is used to identify two stages of the business cycle of the white-water rafting industry: the peak and the trough. Our empirical evidence reveals that unemployment has a negative effect on the number of rafting participants in the troughs while it has a positive effect on the number of rafting participants in the peaks. It follows that economic recession would adversely affect the number of participants in adventure tourism in the troughs, while it is not true in the peaks. Moreover, we show that the more the sunshine hours, the more participants travel on white-water rafting in the peaks. However, temperature is not a determinant of demand for adventure tourism under a subtropical climate, which contradicts much of literature.