Tourism Economics· 2026Q1
Economic policy uncertainty and air travel demand: State-level evidence from the United States
- 0citations
- Q1SCImago
- 2026year
Short summary
Higher economic policy uncertainty (EPU) is linked to a decrease in air travel demand, with a 10% increase in EPU associated with a 0.3% drop in passenger flows.
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Key points
- Higher state-level economic policy uncertainty (EPU) is associated with lower passenger air travel flows in the U.S.
- A 10% increase in EPU is linked to a 0.3% decrease in passenger flows.
- The negative association between EPU and air travel is stronger for domestic flights compared to international flights.
- The impact of EPU on air travel is more pronounced during periods of high COVID-19 policy stringency.
- Rising state unemployment may partially explain the link between EPU and reduced air travel.
AI-generated from the title and abstract; the full text is not read.
Abstract
This study provides state-level evidence from the United States on the relationship between economic policy uncertainty (EPU) and air travel demand. We construct a balanced state–month panel from 2006 to 2023 by combining state-level EPU indices with passenger flows departing from airports located in each state. Using a Poisson pseudo-maximum likelihood estimator with a log-link function, we find that higher EPU is associated with lower passenger flows. Several robustness checks support this finding. The heterogeneity analyses indicate that the association is more negative for domestic than for international passenger flows and at higher levels of COVID-19 policy stringency. Finally, an exploratory mediation analysis provides suggestive evidence that higher state unemployment may account for part of the association. Overall, the findings highlight the relevance of subnational variation in EPU for understanding air travel demand in the United States.
The authors' abstract, as published at the source. Tourism Economics, 2026 · DOI ↗
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Field: General Economics, Econometrics and Finance
General Economics, Econometrics and FinanceEconomics, Econometrics and Finance