Economic Policy Uncertainty Shocks and U.S. Overseas Travel

Abstract

ABSTRACT Unlike previous studies, which find that economic policy uncertainty has an adverse impact on tourism flows, our results from Toda-Yamamoto long-run causality tests reveal the absence of Granger-causality from either U.S. or global economic policy uncertainty indices to U.S. overseas travel. Upon further investigation using generalized impulse response analysis, we discover that unexpected shocks to U.S. and global economic policy uncertainty indices reduce overseas travel with a greater magnitude and longer in duration for the case of a positive shock to global economic policy uncertainty.