Abstract
ABSTRACT The effect of macroeconomic indicators on tourism demand is well-established. However, the plausible impact of interest rate on excess reserves (IOER), an unconventional monetary policy, on inbound tourist flow is unclear. Using monthly data from 2011:M1 to 2019:M9, I assess the responsiveness of inbound tourist flow from the United Kingdom, Germany, Brazil, France, India, and Italy, six major originators of foreign tourists to the United States, to changes in the IOER of the United States. The results of an autoregressive distributed lag model and generalized methods of moment show that monetary expansion in response to a drop in the IOER by the Federal Reserve through the exchange rate channel boosts inbound tourist flow to the United States.
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