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Does climate policy uncertainty affect tourism demand? Evidence from time-varying causality tests

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  • Nicholas Apergis
  • Konstantinos Gavriilidis
  • Rangan Gupta

Abstract

This study examines whether climate policy uncertainty affects the propensity of people to travel. To do so, we employ the Climate Policy Uncertainty (CPU) index and US air-travel data to eight regional overseas destinations for the period 2000–2019. Using time-varying causality tests to deal with the structural breaks that exist in the relationship between CPU and US air travel, we find that CPU is a major determinant of air-travel demand to all destinations examined. The results are robust when we control for macroeconomic factors, uncertainty and geopolitical risks. The findings have important implications for destination countries and tourism professionals.

Suggested Citation

  • Nicholas Apergis & Konstantinos Gavriilidis & Rangan Gupta, 2023. "Does climate policy uncertainty affect tourism demand? Evidence from time-varying causality tests," Tourism Economics, , vol. 29(6), pages 1484-1498, September.
    • Handle: RePEc:sae:toueco:v:29:y:2023:i:6:p:1484-1498
    DOI: 10.1177/13548166221110540
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    More about this item

    Keywords

    climate policy uncertainty; climate policy uncertainty index; air-travel destinations; US; structural breaks; time-varying causality test;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • L8 - Industrial Organization - - Industry Studies: Services

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