Dynamic spillover effects among tourism, economic growth and macro-finance risk factors

Abstract

This paper examines spillover effects among international tourism growth, economic growth and a group of major macroeconomic and financial variables in the US. The empirical results show significant interactions among tourism growth, economic growth and the selected macro-finance factors, which have notably increased following the intensification of the global financial crisis in the fall of 2008. Furthermore, international tourism growth in the US appears as the main net receiver of spillovers from macroeconomic factors, thus providing evidence contrary to the empirical validity of the tourism-led growth hypothesis for the US. However, real GDP growth is identified as a net transmitter of spillovers to the tourism growth, which supports, at least partly, the economic-driven tourism growth hypothesis for the US. Novel to the literature, global economic policy uncertainty is the most important transmitter of shocks to US tourism growth, suggesting that heightened uncertainty about economic policy may have especially harmful effects on international tourism flows.