Impacts of geopolitical risks and economic policy uncertainty on Chinese tourism‐listed company stock

Geopolitical risk, economic growth, economic uncertainty and international inbound tourism: an Indian Illustration

Review of Economics and Political Science ◽

10.1108/reps-07-2020-0081 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Sudeshna Ghosh

Keyword(s):

Economic Growth ◽

Economic Policy ◽

Trade Openness ◽

Policy Uncertainty ◽

Tourism Demand ◽

Content Type ◽

Economic Policy Uncertainty ◽

Long Run ◽

Geopolitical Risks

Purpose This paper aims to consider the role of geopolitical risk in explaining tourism demand in India, a major tourist destination of the Asian region. Furthermore, the study also considers how in addition to geopolitical risk, economic policy uncertainty, economic growth, exchange rate, inflation and trade openness impact tourism demand. Design/methodology/approach The Bayer and Hanck (2013) method of cointegration is applied to explore the relationship between geopolitical risk and tourism demand. Furthermore, the study has also used the auto distributed lag model to determine whether there is a long-run cointegrating association between tourism demand, geopolitical risk, economic policy uncertainty, economic growth, exchange rate and trade openness. Finally, the vector error correction model confirms the direction of causality across the set of the major variables. Findings This paper finds that geopolitical risk adversely impacts inbound international travel to India. This study also obtains the consistency of the results across different estimation techniques controlling for important macro variables. The Granger causality test confirms the unidirectional causality from geopolitical risk to tourism and further from economic uncertainty to tourism. The findings from the study confirm that geopolitical risks have long-term repercussions on the tourism sector in India. The results indicate that there is an urgent need to develop a pre-crisis management plan to protect the aura of Indian tourism. The tourism business houses should develop skilful marketing strategies in the post-crisis to boost the confidence of the tourists. Research limitations/implications This paper provides valuable practical implications to tourism business houses. The tourism business houses can explore geopolitical risk measure and economic policy uncertainty measure to analyse the demand for international tourism in India. Further, the major stakeholders can establish platforms to help tourists to overcome the fear associated with geopolitical risk. Originality/value This study is the first of its kind to explore the geopolitical risks and their long-run consequences in the context of tourism in India. The study puts emphasis on the role of national policy to maintain peace otherwise it would be detrimental to tourism.

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Geopolitical-Risk and Economic Policy–Uncertainty Impacts on Tourist Flows from Neighboring Countries: A Wavelet Analysis

Sustainability ◽

10.3390/su132413751 ◽

2021 ◽

Vol 13 (24) ◽

pp. 13751

Author(s):

Alisa Kazakova ◽

Insin Kim

Keyword(s):

Economic Policy ◽

South Korea ◽

Tourism Industry ◽

Policy Uncertainty ◽

Tourism Demand ◽

Economic Policy Uncertainty ◽

China And Japan ◽

The Impact ◽

Wavelet Coherency ◽

Geopolitical Risks

This paper investigates the nexus of geopolitical risks (GPRs), economic policy uncertainty (EPU), and tourist arrivals in South Korea. Specifically, this research examines whether arrivals from neighboring tourism source countries (i.e., China and Japan) are influenced by geopolitical events and economic volatilities in South Korea. To establish the research purpose, we investigated the relationships among GPRs, EPU, and tourism demand by using monthly data from January 2003 to November 2019. Additionally, innovative techniques (continuous wavelets, wavelet coherency, and wavelet phase difference) were employed, which allow the decomposition of time series considering different time and frequency components. The results demonstrate inconsistent and heterogeneous co-movements between variables that are localized across different time periods and frequencies. In addition, we detected several significant coherencies that prove the important role of GPR and EPU in explaining changes in the numbers of tourists arriving in South Korea from China and Japan. In terms of time domain, negative and positive correlations in tourism demand were detected, meaning that economic and geopolitical shocks may not always lead to negative consequences. From the frequency domain, the causal effects of GPR mostly appear to have short- to mid-run implications, with almost no relationship in the low-frequency band, whereas EPU holds a heterogeneous influence varying short-term to long-term, including higher to lower frequencies. Results show the resilience of the tourism industry against the transient effects of economic and geopolitical shocks. Tourists become adversely affected by external events such as geopolitical risks and economic uncertainties, but the impact is not consistent over time for tourists from countries neighboring Korea. The findings provide a deeper understanding of how crisis events, including political instability and economic fluctuations, can affect inbound tourism in geographically and historically interrelated countries. Therefore, to minimize the negative effect on tourism demand, it is important for practitioners to consider potential external threats when making forecasts.

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