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PurposeThis paper considers the role of economic sentiment and economic policy uncertainty (both domestic and European) in explaining the changes in the contemporaneous and future travel and leisure stock index returns in top European Union (EU) tourism destinations, namely, in France, Germany, Spain and the UK.Design/methodology/approachThe authors conducted the ordinary least square (OLS) regression estimations to investigate the impact of changes in economic sentiment and economic policy uncertainty on travel and leisure stock returns. Furthermore, the authors used predictive regressions to determine whether economic sentiment and economic policy uncertainty are useful predictors over the short- or medium-term for travel and leisure stock returns.FindingsEmpirical results revealed that, in France and Spain, the changes in regional economic sentiments predominantly and positively affected travel and leisure stock index returns. Also, results indicated that changes in European economic sentiment have a strong positive effect on the future travel and leisure stock returns in Spain and the UK over the short run, while in France, changes in European economic policy uncertainty have a weak negative effect on the future travel and leisure stock returns over the medium-term.Research limitations/implicationsThis paper provides valuable practical implications for investors who trade travel and leisure stocks. Traders can use economic sentiment and economic policy uncertainty to establish arbitrageur strategies.Originality/valueThis study is the first to examine the effects of economic sentiment and economic policy uncertainty (both domestic and European) on contemporaneous and future travel and leisure stock returns in a top European tourism destination.

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This study aims to specify the best model to estimate the real equilibrium exchange rate of the Libyan dinner during the period 1985-2020 utilizing ARDL model. The results of this study indicate that the best model explains the determinants of the actual exchange rate (ARE) and predicts the equilibrium real exchange rate (ERER) is the one that consists of oil revenues (OR), terms of trade (TOT), ration of bored money supply to gross domestic product (M2/GDP), ratio of domestic inflation to forging inflation (DINF/FINF) and DUMMY. They also point out that OR is the domino force as it drives the exchange rate of the Libyan dollar against the US dollar. The results also reveal that the misalignment between the AER and the ERER had notably increased since the 2002 devaluation. This study provides valuable information for monetary policy makers by establishing a benchmark for the ERER. This information would assist them to reasonably set the exchange rate for future economic purposes.