Terrorism, tourism and growth: a panel VAR analysis

Dionysios Paliouras (), Savvas Tsentidis () and Theologos Dergiades ()
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Dionysios Paliouras: University of Macedonia
Savvas Tsentidis: University of Macedonia
Theologos Dergiades: University of Macedonia

Journal of Economics and Finance, 2025, vol. 49, issue 1, No 4, 70-94

Abstract: Abstract Does terrorism harm travel demand and income growth? If so, by how much? How long does it take for travel demand and income growth to revert to their initial levels? Are the effects of terrorism short-run, medium-run, or long-run? Within a Panel VAR framework for 28 countries, this study provides answers to the above questions. By analyzing annual data from 1996 to 2020, we find that: (i) Terrorism adversely affects both travel demand and income growth, (ii) A very large, yet observable, shock in terrorism leads to an immediate decrease in travel demand by 15% and income growth by 1.5%, (iii) Travel demand and income growth revert to their previous levels after approximately 2 and 1.5 years, respectively, (iv) The effects of terrorism are characterized as medium-run. Finally, policy recommendations are also provided.

Keywords: Terrorism; Tourism arrivals; Economic growth; Panel VAR (search for similar items in EconPapers)
JEL-codes: C33 L83 Z32 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s12197-024-09703-9

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