Tourism Uncertainty and Services Balance: An External‐Sector Perspective on Sustainable Tourism and the Moderating Role of Government Size

ABSTRACT The tourism sector has strong intersectoral linkages and can make significant contributions to the external balance, particularly through service exports and foreign‐exchange earnings. For these reasons, it is also closely connected to sustainability, especially its economic dimension. As the sector is highly exposed to uncertainty shocks, these shocks may reduce its economic contributions. Based on this, our study analyzes the relationship between tourism uncertainty, measured by the Tourism Uncertainty Index (TUI), and the services balance in selected countries over the 2003–2024 period. We also focus on the moderating role of government size in this relationship. In addition, we adopt the MMQR approach to examine how this relationship differs across the services balance distribution. Our empirical findings, supported by robustness checks and sensitivity analyses, indicate a negative relationship between TUI and the services balance, evidenced at lower quantiles, while government size exhibits a positive moderating role, particularly at lower and middle quantiles. In this respect, our study brings together uncertainty transmission mechanisms and macroeconomic stabilization approaches in the context of the aggregate services balance and contributes to the uncertainty–tourism literature from an external‐sector perspective through the moderating role of government size. Based on the findings, we recommend that policymakers consider TUI as a source of external balance vulnerability arising through the services balance channel and assess how fiscal policies can enhance economic resilience to tourism‐related uncertainty.