This paper analyses the effects of the real exchange rate and world income on aggregate international tourism in Australia. This study uses Auto Regressive Distributed Lag (ARDL) modelling to develop a dynamic structure of tourism demand. Using monthly post-float data from 1984:01 to 2015:01, it has been found that a 1 % real appreciation of the Australian dollar reduces tourist arriv-als by 1.23 % while a 1 % rise in world income increases tourist arrivals by 2.26 % in the long-run. The deviation from the long-run equilibrium is correct-ed by nearly 9 % over a month. One of the endogenously determined structural break dates was negative and statistically significant indicating non-linearity in the Australian aggregate tourist demand function.
