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

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

Special Issues: Special Issue on the Economic and Financial Impact of “COVID-19”

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 “quarantine economy” 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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