Economic Policy Uncertainty and Tourism in Croatia: A Wavelet Analysis

Abstract

By using wavelet analysis, we find that domestic Economic Policy Uncertainty (EPU) has short and long-term adverse effects on domestic tourism in Croatia. Domestic and global EPU (GEPU) have a negative relationship with foreign arrivals; however, the impact of domestic EPU on foreign arrivals is significantly bigger. The co-movements between nights of stay per domestic tourists and domestic EPU are positive in the short and the long run, while the relationship with GEPU is negative. Our findings for the foreign arrivals per tourist is the opposite of those for the domestic. There is a positive relationship between foreign arrivals per tourist and GEPU.