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      Testing the efficacy of the economic policy uncertainty index on tourism demand in USMCA: Theory and evidence

      1 , 2 , 3
      Tourism Economics
      SAGE Publications

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          Abstract

          The global economic outlook is more uncertain than ever before and sensitive to uncertainties related to a variety of economic policies decisions of all stakeholders and governments. These perceived uncertainties may be the culprit in shrinking the size of overall economic activity. Under increasing uncertainties, travel and vacation plans of consumers can be canceled or postponed. Therefore, policy-related economic uncertainties are expected to affect tourism demand beyond well-established economic and noneconomic factors. In this study, we explore the efficacy and the impact of the economic policy uncertainty (EPU) index in predicting the tourism demand on international tourist arrivals (a measure of tourism demand) to the United States from Mexico and Canada over the period of January 1996–September 2017. The findings of the study reveal that EPU is a significant predictor as increases in the EPU index lead to decreases in tourism demand to the United States. Canadian tourists seem to be more sensitive to EPUs. Increases in the EPU index cause them to reduce Canadians’ vacations to the United States proportionally more than the Mexicans. To enhance the explanatory power of current models, the uncertainty can be a theoretically significant construct thus needs to be included when calibrating demand models.

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              Estimating and Testing Linear Models with Multiple Structural Changes

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                Author and article information

                Contributors
                Journal
                Tourism Economics
                Tourism Economics
                SAGE Publications
                1354-8166
                2044-0375
                December 2020
                November 22 2019
                December 2020
                : 26
                : 8
                : 1344-1357
                Affiliations
                [1 ]Anadolu University, Turkey
                [2 ]University of South Carolina, USA
                [3 ]St. Mary’s College of Maryland, USA
                Article
                10.1177/1354816619888346
                5c4d1d40-977a-4ca0-b5a9-81003f227791
                © 2020

                http://journals.sagepub.com/page/policies/text-and-data-mining-license

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