Exploring the influence of economic policy uncertainty on the relationship between tourism and economic growth with an MF-VAR model

Abstract

Using a mixed-frequency vector autoregressive (MF-VAR) model, this article attempts to determine whether or not the relationship between tourism and economic growth changes in the presence or absence of economic policy uncertainty (EPU) shock. Moreover, we further our analysis by focusing on whether or not there is a significant difference in the distinct impact intensity of Hong Kong, Chinese, and global EPU. The study period spans April 1998 to March 2018. The results indicate the following. First, the existence of Hong Kong, Chinese, and global EPU does not affect the direction of the impulse response; rather, its primary influence is on the size of the impact. Second, the different ranges of EPU have different impact intensities. Third, compared to the MF-VAR model, the quarterly frequency vector autoregressive model does not fully capture the impact of EPU, especially the negative impact of global EPU on tourism. Therefore, policymakers and tourism stakeholders should develop targeted marketing plans to maintain expected tourism demand if economic uncertainty increases.

Forecasting US overseas travelling with univariate and multivariate models

“…In the standard VAR modelling, the potential drivers identified by the literature are the real effective ER (Kuo, Wang, Hwang, & Ye, 2009;Nowjee, Poloodoo, Lamport, Padachi, & Ramdhony, 2012;Webber, 2001), real personal disposable income per capita (Lee, Fu, & Peng, 2015), the geopolitical risk index (GPR) (Antonakakis, Gupta, Kollias, & Papadamou, 2017;Bassil, Saleh, & Anwar, 2019;Lanouar & Goaied, 2019), the US economic policy uncertainty (Balli, Uddin, & Shahzad, 2019;Gozgor & Ongan, 2017;Sharma, 2019) and global economic policy uncertainty (Akadiri, Alola, & Uzuner, 2019;Liu, Liu, & Wang, 2020;Nguyen, Schinckus, & Su, 2020;Wu & Wu, 2020).…”

The anthropogenic consequences of energy consumption in the presence of uncertainties and complexities: evidence from World Bank income clusters

“…In that way, environmental policies induce environmental quality. Similarly, Liu et al (2020) attempted to evaluate the impact of EPU on the tourism-growth nexus. Using the case study of Hong Kong, Chinese, and global EPU, the authors suggested that EPU influences the size of the impulse response.…”

Promoting traditional local cuisines for tourists: evidence from Taiwan

“…When governments regard traditional local characteristics of products and gourmet tourism as the focus of development, they play a decisive role in revitalizing traditional cuisine (Ang, 2018; Haque and Thaku, 2015; Shinohara, 2017, Liu et al , 2021). Since the adoption of tourism policies depends on economic conditions, the dissemination of such policies will increase as the appeal of traditional cuisine to international tourists increases over time.…”