This paper investigates exchange rate effects on US tourism trade in structural vector autoregressive models with quarterly data for the floating exchange rate from 1973 to 2007. Tourism export revenue and import spending are examined along with the tourism trade balance. Depreciation raises the US tourism trade balance with a unit elastic effect after six quarters with no evidence of J-curve behaviour. Only export revenue is marginally sensitive to the exchange rate. Foreign travel is a luxury good for US tourists, while travel to the USA is a normal good for foreign tourists.

Closed-End Fund (CEF) discounts have intrigued researchers for decades. Of the many explanations offered, the behavioural framework of Lee et al. ( 1991 Lee, C. M. , Shleifer, A. and Thaler, R. H. 1991. Investor sentiment and the closed-end fund puzzle. Journal of Finance, 66: 75–109. [Crossref] [Google Scholar] ), which posits noise traders subject to sentiment, is the most discussed. In this article, we contribute some novel evidence to the evaluation of this theory by examining the role of implied market volatility (VIX, i.e., the ‘fear index’) in fund discounts using a Dynamic Conditional Correlation (DCC) approach. We find that VIX has almost no role in determining discounts except during periods of extreme market turbulence, providing strong but indirect evidence for the sentiment story.