A wavelet analysis for exploring the relationship between economic policy uncertainty and tourist footfalls in the USA

ABSTRACT

We attempt to establish the relationship between Economic Policy Uncertainty (EPU) and international tourist footfalls in the USA. In the first stage, we investigate the influence of country-specific EPU and global EPU on tourist footfalls. Since, these two are overlapping in nature, in the second stage, we study the isolated influence of country-specific EPU on footfalls by eliminating the influence of global EPU and vice versa. We consider a study period spanning over January 1997 to April 2017. To capture the variations in the relationship at different time dimensions, we apply wavelet-based techniques. We observe the following: (a) the impact of policy uncertainty shock has a little immediate impact on tourist footfalls, (b) medium to long-run shocks persist due to occurrence of major undesirable economic events, and (c) the influence of domestic (country-specific) EPU is dominant in comparison to global EPU for the USA.

KEYWORDS:

• Economic policy uncertainty
• tourist footfalls
• wavelet

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Debojyoti Das http://orcid.org/0000-0001-9756-1266

R. K. Jana http://orcid.org/0000-0001-8564-112X

Aviral Kumar Tiwari http://orcid.org/0000-0002-1822-9263

Notes

1 To express economic and policy uncertainty, events such as US elections, 9/11 terror, 2nd Gulf war, European Debt Ceiling dispute, Global Financial Crisis 2008 and many others. For a detailed information regarding events considered to construct the EPU index, refer: http://www.policyuncertainty.com/methodology.html.

2 For detailed review refer, ‘when disaster strikes airlines scramble’ (14 March 2011), https://www.marketwatch.com/story/what-airlines-do-for-travelers-after-a-natural-disaster-1300126297922, accessed November 9, 2017.

3 Around 2009 amid the global economic uncertainty that started in 2008 caused severe downturn in the tourism industry of the USA. For full report refer http://travel.trade.gov/pdf/2009-year-in-review.pdf, accessed October 14, 2017.