How consumer confidence is reshaping the outbound tourism expenditure in China? A lesson for strategy makers!

Abstract

Tourism is a rapidly rising sector that contributes significantly to economies. In this paper, we apply a bootstrap full-sample causality test, parameter stability test, and quantile-on-quantile approach test so as to examine the relationship between consumer confidence index (CCI) and outward tourism expenditure (OTE) for the period between 1998:Q1 to 2021:Q4. The results of the findings reflect that CCI tends to exert a positive impact on the OTE in most of the quantiles. This essentially implies that consumer confidence in China can act as a compound for outbound tourism expenditure in nature. Therefore, it can be affirmed that the OTE tends not to have an effect on the CCI, thus extending the implication that an alteration in the private outbound tourism spending in most likely to be insufficient for the modification of the factor of consumer confidence. To ensure the robustness of the results, we have employed the quantile-based granger causality to investigate the causal relationship in quantile between CCI on the OTE. The results of this study tend to educate the foreign tourism policymakers, while at the same time making forecasts of the tourism arrivals from China. Policymakers can then plan their tourism strategies, ideally including the CCI.