Abstract
Utilizing a Vector Autoregressive (VAR) model, the present study investigates the multifaceted relation between domestic tourism and the inflation rate in Uzbekistan. By applying annual inflation rates and monthly-adjusted data on the number of domestic tourists from January 2016 to September 2023, this study examines whether an upsurge in tourism activity influences inflation or if an increase in inflation impedes domestic tourism. Time series analysis, ACF and PACF plots, and unit root tests are employed as methodological approaches to validate stationarity in the tourism data and stationarity at first difference in the inflation data, respectively. While in the beginning, Johansen tests for cointegration assert that two variables are co-integrated at first, but later they are not. The outcomes deriving from the VAR model hint at the existence of a strong, unidirectional connection between the incoming tourists and subsequent inflation where the effects show up at 1st lag. This discovery put a spotlight on the fact that domestic tourism would increase due to inflation-bound measures. Accordingly, these research enable the grasp of the economic dynamics between inflation and tourism which are important pieces of information which can be useful for the government officials of Uzbekistan in their efforts to sustain stable economy and promoting domestic tourism at the same time.