Economic policy uncertainty and demand for international tourism: an empirical study

Abstract

The sensitivity of countries to the global macroeconomic uncertainty is directly related to the income level affecting, therefore, the demand for the outbound international tourism. Precisely, we observe that a higher economic policy uncertainty leads to more departures and more total expenditures but less expenditure per tourist – this finding is the first contribution of this article since it suggests that outbound tourism might be considered as an inferior good. In an uncertain context increasing the probability of decrease in the agents’ wealth, the population travel more but spend less money per trip suggesting that these travels are mainly made in neighbour countries. A higher uncertainty also induces a higher demand for outbound international tourism but less touristic expenditures in low- and lower-middle-income economies. These findings show the multifaceted aspect of tourism since it suggests an emigration effect that we discuss in this article.