Time-varying causality between tourist arrivals and geopolitical risks: evidence from Türkiye

Kutlu, Muhammet (2025) Time-varying causality between tourist arrivals and geopolitical risks: evidence from Türkiye. ACTA OECONOMICA, 75 (4). pp. 567-583. ISSN 0001-6373

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Abstract

This study aims to investigate whether tourist arrivals in Türkiye, one of the world's most popular tourist destinations, are influenced by geopolitical risks. Thus, the study offers implications for the basic hypothesis that geopolitical risks do not influence the travel decisions of tourists visiting popular tourist destinations. The study analyzes the relationship between Türkiye's geopolitical risk index and the number of tourist arrivals to Türkiye for the period 1990M01-2024M05 using the time-varying causality testing procedure proposed by Shi et al. (2018, 2020). Thus, the study findings are sensitive to the possibility that the relationship between variables may change over time. The findings confirm a causal relationship between geopolitical risks and tourist arrivals in specific periods. The results indicate that geopolitical risks were a determinant of tourist arrivals in Türkiye from the second half of 2007 to the second half of 2016. These findings, obtained from the time-varying causality test, differ from the traditional Toda-Yamamoto causality test, which reveals that there is no Granger causality between the variables during the considered period. The study findings highlight the need for policy calibration within the countries' geopolitical risk dynamics. The results explicitly obtained for Türkiye can be generalized to countries with similar risk and tourism dynamics. Governments and destination managers are advised to implement crisis pricing, visa flexibility, strategic communication to manage destination image, and coordination between the tourism and defense/security ministries during high-risk periods.

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