Asymmetric impact of oil prices, exchange rate, and inflation on tourism demand in Pakistan: new evidence from nonlinear ARDL

ABSTRACT

This study scrutinized the asymmetric impact of oil prices, exchange rate, and inflation on tourism demand in Pakistan using [Shin, Y., Yu, B., & Greenwood-Nimmo, M. (2014) Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In Festschrift in honor of peter schmidt (pp. 281–314). New York, NY: Springer] nonlinear autoregressive distributed lag (NARDL) model. The NARDL bounds test examined the existence of cointegration in study variables, including CO₂ emissions, institutional quality, oil prices, exchange rate, inflation, and tourism demand. The evidence proposes that disregarding the intrinsic nonlinearities may misinform inference. The estimated NARDL model affirmed long-run negative and significant effect of CO₂ emissions on tourism demand, while institutional quality was positively associated with tourism demand. Furthermore, the findings of the study also suggested long-run asymmetric relationship between oil prices, exchange rate, inflation, and tourism demand.

KEYWORDS:

• Asymmetric ARDL
• tourism demand
• exchange rate
• institutional quality
• Pakistan

Acknowledgement

The authors thank the anonymous referees for their constructive comments and helpful criticisms that have made the paper better. Furthermore, the authors also thank Matthew Greenwood-Nimmo (University of Melbourne) and Mohammad Hassan (hassanhaniif.blogspot.com) for NARDL codes.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. http://www.e-unwto.org/doi/pdf/10.18111/9789284416899.

2. http://www.e-unwto.org/doi/book/10.18111/9789284411900 .

3. http://www.e-unwto.org/doi/book/10.18111/9789284415427 .

4. https://www.weforum.org/reports/travel-and-tourism-competitiveness-report-2013 .

5. World Tourism Organization (UNWTO) report 2013 retrieved from http://cf.cdn.unwto.org/sites/all/files/pdf/unwto_annual_report_2013_0.pdf.

6. http://info.worldbank.org/governance/wgi/index.aspx#reports .

7. http://www.travelmole.com/news_feature.php?id=97591 .

8. https://www.weforum.org/reports/the-travel-tourism-competitiveness-report-2017.

9. https://www.weforum.org.

10. http://www2.unwto.org/publication/unwto-annual-report-2012 .

11. http://www.e-unwto.org/doi/book/10.18111/9789284413492.