An examination of the asymmetric effect of oil prices on tourism receipts

Few papers have examined the effect of oil prices on tourism receipts and the sensitive susceptibility of tourism to oil price changes. Little attention was paid to examining the asymmetrical effect of oil prices on tourism receipts, testing whether the positive innovations in oil prices has the same effect as their negative counterparts. As such, this paper sheds light on the asymmetrical association of the tourism receipts-oil price nexus for 19 randomly-selected international destinations due to data availability, between 1995 and 2015. This was done by employing the non-linear autoregressive distributed lags (NARDL) model. The empirical findings document a long-run asymmetrical effect, after incorporating the structural breaks, in the case of Austria, France, United Kingdom, Greece, Iceland, Italy, Luxemburg, Norway, Portugal, Sweden and the United States, although the long-run relationship (cointegration) was found for all countries, except for Finland. Furthermore, the short-run asymmetrical impact was detected in the case of Austria, United Kingdom, Portugal, Sweden and the United States. This suggests that governments and tourism businesses and organizations should interpret oil price fluctuations cautiously.