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Terrorism, tourism and growth: a panel VAR analysis

Author

Listed:
  • Dionysios Paliouras

    (University of Macedonia)

  • Savvas Tsentidis

    (University of Macedonia)

  • Theologos Dergiades

    (University of Macedonia)

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.

Suggested Citation

  • Dionysios Paliouras & Savvas Tsentidis & Theologos Dergiades, 2025. "Terrorism, tourism and growth: a panel VAR analysis," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 49(1), pages 70-94, March.
    • Handle: RePEc:spr:jecfin:v:49:y:2025:i:1:d:10.1007_s12197-024-09703-9
    DOI: 10.1007/s12197-024-09703-9
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    More about this item

    Keywords

    Terrorism; Tourism arrivals; Economic growth; Panel VAR;
    All these keywords.

    JEL classification:

    • Z32 - Other Special Topics - - Tourism Economics - - - Tourism and Development
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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