The impact of global uncertainty and risks on the global tourism index

Abstract

Uncertainties and risks are two leading factors affecting investors’ decisions. In the presence of uncertainty, investors may postpone consumption and investment decisions due to a wait-and-see policy, whereas consumption and investment decisions may be abandoned in risky situations. Due to its high demand elasticity, in particular, renders tourism as one of the sectors most affected by the increase in uncertainty and risks. In this context, it is aimed to determine whether or not any relationship between global Economic Policy Uncertainty index (EPU), global Geopolitical Risk Index (GPR) and global Volatility Index (VIX) and global tourism index STOXX Global 1800 T&L exists. The probable relationship between the variables is tested using monthly data over the period from August 2006 to December 2018 via Johansen cointegration test and DOLS and FMOLS cointegration coefficient estimators. As a result of the study, it is found that there is a long-term relationship between the related indices and the global tourism index and that the VIX and the EPU indexes have an adverse impact on the tourism index.

Keywords

• Stock Exchange Index
• EPU
• Geopolitical Risk
• VIX
• Cointegration Analysis
• FMOLS and DOLS

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