Asymmetric impact of oil prices, exchange rate, and inflation on tourism demand in Pakistan: new evidence from nonlinear ARDL

This study scrutinized the asymmetric impact of oil prices, exchange rate, and inflation on tourism demand in Pakistan using [Shin, Y., Yu, B., & Greenwood-Nimmo, M.(2014) Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In Festschrift in honor of peter schmidt (pp.281-314). NewYork, NY: Springer] nonlinear autoregressive distributed lag (NARDL) model. The NARDL bounds test examined the existence of cointegration in study variables, including CO2 emissions, institutional quality, oil prices, exchange rate, inflation, and tourism demand. The evidence proposes that disregarding the intrinsic nonlinearities may misinform inference. The estimated NARDL model affirmed long-run negative and significant effect of CO2 emissions on tourism demand, while institutional quality was positively associated with tourism demand. Furthermore, the findings of the study also suggested long-run asymmetric relationship between oil prices, exchange rate, inflation, and tourism demand.