Economic Policy Uncertainty and Tourism Demand: Empirical Evidence from the USA

Abstract

This paper investigates the effects of uncertainty on tourism spending ( direct sales) by USA domestic tourists over the period of 1998Q1-2015Q4. For this purpose, for the first time, the Economic Policy Uncertainty index was used as an independent variable in tourism demand analysis models. Unit root and cointegration tests are applied to account for unknown structural breaks. The empirical findings indicate that a higher level of Economic Policy Uncertainty leads to significant declines in tourism spending in the long run. Copyright (C) 2016 John Wiley & Sons, Ltd.