Time varying interdependency between COVID-19, tourism market, oil prices, and sustainable climate in United States: evidence from advance wavelet coherence approach

Abstract

This study attempts to empirically estimate the interdependence between COVID-19, tourism market, oil prices, and sustainable climate in United States. In doing so, we employ an advanced Morlet's wavelet approach, namely, Wavelet coherence transform (WCT), Partial and Multiple Wavelet Coherence and found a strong co-movement between variables, which is varied across the time scales, indicating the initial, peak, and after peak effect of COVID-19 on tourism market, oil prices, and carbon emissions using daily data from 6 March 2020 to 6 August 2020. The visuals of WCT exhibit a cyclic (anti-cyclic) relationship between tourism and oil prices, suggesting a strong positive (negative) co-movement in the shorter and longer (medium) period. Tourism and carbon emissions possess a strong positive co-movement across all periods except in the medium run; however, the intensity of this movement is higher in the very short-run compared to medium and longer-run. The results reveal an anti-cyclic association between COVID-19 and tourism, and COVID-19 is leading tourism with strong negative co-movements. Finally, the results describe that carbon emissions and COVID-19 are anti-cyclical and display a positive causality in the shorter run. These results offer valuable guidelines for all stakeholders.