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Papagianni, Estela, Evgenidis, Anastasios, Tsagkanos, Athanasios and Megalooikonomou, Vasileios (2023) 'Tourism Demand in the Face of Geopolitical Risk: Insights From a Cross-Country Analysis.' Journal of Travel Research. (Forthcoming)

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Abstract

This paper develops a novel Bayesian heterogeneous panel vector autoregressive model (B-HP-VAR) that quantifies the impact of geopolitical risk shocks on the tourism industry of 14 emerging market and developing economies (EMDE). We find that increasing geopolitical tensions have a persistent negative effect on tourism demand in most of these countries, as shown by our impulse response estimates. Furthermore, evidence from forecast error variance decomposition reveals that geopolitical risk shocks in many EMDE economies constitute the main driver of tourism demand. Analysis from historical decompositions demonstrates that geopolitical tensions have been particularly influential in driving tourism demand in Ukraine, Russia, Turkey, China, Indonesia, Thailand, Colombia, and Mexico. Our main findings are robust to several perturbations to the benchmark specification. Our results have several important implications for policymakers in their efforts to strengthen the ability of the tourism industry to absorb shocks from geopolitical tensions.

Item Type: Journal Article
Keywords: tourism demand, geopolitical risk, panel VAR, impulse responses, macroeconomy
SOAS Departments & Centres: Administration and Professional Services > Research and Enterprise Office
ISSN: 15526763
DOI (Digital Object Identifier): https://doi.org/10.1177/00472875231206539
SWORD Depositor: JISC Publications Router
Date Deposited: 12 Nov 2023 10:12
URI: https://eprints.soas.ac.uk/id/eprint/40906

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