Asymmetric impact of COVID-19 induced uncertainty on inbound Chinese tourists in Australia: insights from nonlinear ARDL model

Sudeshna Ghosh; Sudeshna Ghosh

doi:10.3934/QFE.2020016

Quantitative Finance and Economics

2020, Volume 4, Issue 2: 343-364. doi: 10.3934/QFE.2020016

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Asymmetric impact of COVID-19 induced uncertainty on inbound Chinese tourists in Australia: insights from nonlinear ARDL model

Sudeshna Ghosh ^,

Department of Economics, Scottish Church College,1 &3 Urquhart Square, Kolkata, West Bengal, Pin-700006, India

Received: 28 April 2020 Accepted: 25 May 2020 Published: 27 May 2020
JEL Codes: C01, C10, C22, Z3

This paper explores the asymmetric impact of COVID related uncertainty measured by the newly formulated index (Discussion about Pandemics Index), conceptualized by Baker et al. (2020) and postulated by Ahir et al. (2018) and Ahir et al. (2020) on Chinese tourist arrivals in Australia over the period 1996Q1 to 2020Q1. It is worthwhile to investigate how the pquarantine economyq is adversely impacting tourism in Australia concerning an important market namely the Chinese market. The paper utilized the novel asymmetric (nonlinear autoregressive distributed lag model) to capture the asymmetric association between tourism and uncertainty. The main upshot of the research points out that economic policy uncertainty weighted by the pandemics asymmetrically impacts tourist arrivals. One per cent rise in uncertainty leads to a decline in tourist arrivals by 10 per cent while one per cent decline in uncertainty leads to a rise in tourist arrivals by 0.22 per cent. The effect of the positive change of the policy uncertainty index is more infusing than the impact of negative change so the asymmetry is confirmed. Further, the Wald test endorse asymmetry behaviour across the variables.
- discussion about pandemics index,
- COVID-19,
- tourist arrivals,
- income,
- relative price,
- exchange rate volatility,
- time series,
- NARDL model,
- Australia,
- China
Citation: Sudeshna Ghosh. Asymmetric impact of COVID-19 induced uncertainty on inbound Chinese tourists in Australia: insights from nonlinear ARDL model[J]. Quantitative Finance and Economics, 2020, 4(2): 343-364. doi: 10.3934/QFE.2020016

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Abstract

This paper explores the asymmetric impact of COVID related uncertainty measured by the newly formulated index (Discussion about Pandemics Index), conceptualized by Baker et al. (2020) and postulated by Ahir et al. (2018) and Ahir et al. (2020) on Chinese tourist arrivals in Australia over the period 1996Q1 to 2020Q1. It is worthwhile to investigate how the pquarantine economyq is adversely impacting tourism in Australia concerning an important market namely the Chinese market. The paper utilized the novel asymmetric (nonlinear autoregressive distributed lag model) to capture the asymmetric association between tourism and uncertainty. The main upshot of the research points out that economic policy uncertainty weighted by the pandemics asymmetrically impacts tourist arrivals. One per cent rise in uncertainty leads to a decline in tourist arrivals by 10 per cent while one per cent decline in uncertainty leads to a rise in tourist arrivals by 0.22 per cent. The effect of the positive change of the policy uncertainty index is more infusing than the impact of negative change so the asymmetry is confirmed. Further, the Wald test endorse asymmetry behaviour across the variables.

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