Tourist arrivals in four major economies: another side of economic policy uncertainty and fear

Does economic policy uncertainty drive outbound tourism expenditures in 20 selected destinations?

Across several destinations, tourism receipts and the aspects of tourism industry has continued to influence the quality of life of the people as well contributing to the national development and sustainable growth. However, the uncertainties and risks experienced in the tourism industry and other economy sectors have remained the drawback of most economies and destinations. As such, the panel of 20 selected destinations is investigated via the common correlated effect method to examine the nexus of economic policy uncertainty and tourism development over the period 2001-2017. Interestingly, the result established a long term relationship between the economic policy uncertainty index and outbound tourism expenditures. Specifically, the finding revealed that outbound tourism expenditures are affected negatively by the rise of uncertainty in economic policies, thus suggesting instability of economic-related policy is the bane of tourism development in the destinations. This result stands to have important policy guide for especially for tourism-related activities in the panel of 20 selected countries.

Analyzing the Nexus Between Geopolitical Risk, Policy Uncertainty, and Tourist Arrivals: Evidence From the United States

This study attempts to explore the causal linkage of the COVID-19 pandemic, economic policy uncertainty, geopolitical risk, and tourism arrivals in the United States taking data from January to November 2020. In order to analyze the above relationship, this study uses a novel time-varying granger causality test developed by Shi et al. (2018), which incorporates its three causality algorithms such as forward recursive causality, rolling causality, and recursive evolving causality. The findings from forward recursive causality could not confirm any significant causal relationship between COVID-19 and tourism, geopolitical risk (GPR) and tourism, economic policy uncertainty and tourism, and geopolitical risk and COVID-19 but found causality between economic policy uncertainty and COVID-19. The rolling window causality reported bidirectional causality between COVID-19 and tourism and unidirectional causality running from tourism to geopolitical risk. However, the recursive evolving causality identified a significant bidirectional causal relationship between all the variables. Based on the findings, policy implications for the tourism sector are provided.

Tourism-Related Loans as a Driver of a Small Island Economy: A Case of Northern Cyprus

Although the literature on the contribution of tourism to economic expansion vis-à-vis the tourism-led growth hypothesis has been widely explored, so far, limited attention has been paid to the specificity of the role of tourism-related loans or financial inducement in economic growth. This paper examines the short-run and long-run relationships between bank loan disbursements to the tourism sector and economic growth in Northern Cyprus. We structurally derive empirical equations for co-integration and error-correction models by extending the original Solow growth model, applying a cointegration approach that is strengthened by the autoregressive distributed lag and Granger causality approaches to reveal important findings. The empirical findings suggest unidirectional causality from loans disbursed to the tourism sector to economic growth in Northern Cyprus for the period under study. Additionally, we show that tourism-related loans and human and technological advancement all spur economic growth in the short- and long-run. These findings’ main policy implication is that long-term complementary policies in the domestic banking system can increase the access to financial sources for tourism enterprises and, consequently, promote tourism-led economic growth, especially in small tourism-dependent economies where capital sources are scarce.

Economic Policy Uncertainty and Financial Innovation: Is There Any Affiliation?

The impetus of this study is to gauge the nexus between economic policy uncertainty (EPU) and financial innovation in Brazil, Russia, India, China, and South Africa (BRIC) nations for the period from 2004M1 to 2018M12. This study utilizes both the linear and non-linear autoregressive distributed lag (ARDL) models to evaluate the long-run and the short-run association between EPU and financial innovation; furthermore, the causal effects are investigated by following the non-Granger casualty framework. The results of long-run cointegration, i.e., the test statistics of modified F-test (FPSS), standard Wald test (WPSS), and tBDM, reject the null hypothesis and establish the presence of the long-run association between EPU and financial innovation. Conversely, long-run asymmetry cointegration revealed the test statistics of FPSS, WPSS, and tBDM in non-linear estimation. Furthermore, both in the long run and short run, the Wald test results disclose asymmetric effects running from EPU to financial innovation. In regards to the asymmetric impact of EPU on financial innovation, this study documents that the positive and negative shocks in EPU are negatively linked with financial innovation in the long run but are insignificant for short-run effects. Besides, financial innovation measured by R&D investment exhibits a positive linkage with shocks in EPU, implying that uncertainty induces innovation in the economy. Referring to causality effects, this study divulges the feedback hypothesis, i.e., bidirectional causality prevails between EPU and financial innovation in all sample countries.

Do pandemics have an asymmetric effect on tourism in Italy?

In this study, the asymmetric Granger causality relationship between tourist arrivals and world pandemic uncertainty index is examined by controlling inflation, consumer confidence index, and industrial production for the period 2000M1 and 2020M1 in Italy. To the best of our knowledge, the current study is one of the few studies to investigate the relationship between tourist arrivals and world pandemic uncertainty in an asymmetric framework. The empirical results show that using the Granger causality test in a linear framework causes bias results due to misspecification. Therefore, the study relies on asymmetric Granger causality test results which reveal that the positive shock of world pandemic uncertainty Granger causes a negative shock of tourist arrivals. It is suggested that international tourist arrivals are sensitive to external shocks such as pandemics and in such instances the government of the concerned country can insulate the tourism-service and hospitality industry against the shocks by developing strategies to promote full information between all stakeholders.