The Impact of Latent Variables on Tourism Demand in Iran: A Kalman Filter Approach

10.22055/jqe.2026.51974.2759

Articles in Press, Accepted Manuscript
Available Online from 21 September 2026

Document Type : Research Paper

Authors

1 allameh Tabatabai uiversity

2 shahid bahonar university of kerman

3 Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran

Abstract
One of the fundamental issues in tourism economics is the accurate identification of the key variables that structurally determine and explain fluctuations in tourism demand over time. The present study focuses on the Iranian economy and seeks to identify and evaluate the effects of major economic and environmental factors influencing tourism demand. To this end, variables such as income, consumer price index (CPI), trade openness, inflation, gross domestic product (GDP), global oil prices, exchange rate, and security index are examined. These variables are estimated within five separate models using the Kalman Filter approach. The analysis employs quarterly data covering the period from the first quarter of 2011 to the fourth quarter of 2024, allowing for a dynamic and time varying assessment of the determinants of tourism demand. Empirical findings indicate that increases in income, GDP growth, higher levels of trade openness, rising oil prices, and exchange rate appreciation exert positive and significant effects on inbound tourism demand to Iran. In contrast, inflationary conditions are found to have a constraining impact, suggesting that greater price instability reduces the attractiveness of Iran as a travel destination by increasing uncertainty. The results further emphasize that security plays a highly influential and decisive role in the development of the tourism sector, serving as one of the most critical variables in achieving sustainable growth in tourism. Based on these results, it is concluded that strengthening the tourism industry in Iran requires more than simply investing in physical infrastructure. Sustainable growth in this sector also depends on improving macroeconomic stability, mitigating inflationary pressures, fostering a favorable business environment, and enhancing the country’s image as a safe and reliable destination. Overall, the findings of this research provide valuable insights for policymakers, highlighting the need for integrated strategies that combine infrastructure development, sound economic management, and constructive international engagement in order to attract a more diverse and extensive range of foreign tourists and to better harness the potential contribution of tourism to Iran’s economic growth.

Keywords

Subjects
  • Receive Date 20 April 2026
  • Revise Date 11 August 2026
  • Accept Date 05 September 2026
  • First Publish Date 21 September 2026
  • Publish Date 21 September 2026