Reformulating Critical Values for the Bounds F- statistics Approach to Cointegration: An Application to the Tourism Demand Model for Fiji

This paper examines the short-and long-run relationships between visitor arrivals to Fiji, real disposable incomes, and own-hotel price and substitute hotel price for the period 1970-2000, using the bounds testing approach to cointegration and error correction models. The paper's main contribution is that it generates bounds F-statistic critical values specific to the study's sample size (31 observations) and finds that critical values are 35.5% higher than those reported in Pesaran et al. (2001) for 1000 observations and 17.1% higher than those reported in Pesaran and Pesaran (1997) for 500 observations for a model with 4 regressors and an intercept. In the light of this, we tabulate critical values for sample sizes ranging from 30 observations to 80 observations, which will be usefull for future researchers using the bounds testing approach to cointegration.