Investigating the Uncertainty of Government Economic Policies on Inbound Tourism in Iran

Mohammadzadeh Azam () and Shahiki Tash Mohammad Nabi ()
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Mohammadzadeh Azam: University of Sistan and Baluchestan, Zahedan, Iran
Shahiki Tash Mohammad Nabi: University of Sistan and Baluchestan, Zahedan, Iran

New Global Studies, 2021, vol. 15, issue 1, 85-99

Abstract: Over the past three decades, there has been an increasing focus on the subject of global tourism in Iran’s economy. This article examines the most important economic factors affecting this industry in this country, especially economic policy uncertainty. For this purpose, three models specify the number of tourists entering the country as a dependent variable and Consumer Price Index, Tehran Exchange Price Index, market exchange rate, semi-annual dummy variable, and exports as explanatory variables. To investigate the uncertainty of the government’s economic policies, three variables liquidity fluctuations, tax revenue fluctuations, and government expenditures fluctuations have been added along with the above variables. To obtain the fluctuations, the GARCH function is used then the relations are estimated by the GMM method. The estimation of models using monthly data from March 2011 to August 2018 shows that explanatory variables are significant. The results indicate that economic policy uncertainty has negatively affected the arrival of the tourist. An increase in exchange rate, consumer price index, exports, and stock market price index have a positive effect on the arrival of tourists. Therefore, due to inbound tourism sensitivity to shocks, the growth and survival of tourism depend on economic and political stability.

Keywords: inbound tourism; GARCH function; GMM method; global tourism industry; Iran (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1515/ngs-2020-0025

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