EXAMINING THE KOREAN INBOUND TOURISM MARKET CYCLE: A MARKOV REGIME-SWITCHING MODEL

This study analyzes the Korean inbound tourism market (KITM) cycle and the driving forces of the KITM cycle. Based on data of tourism receipts from 1976 Q1 to 2012 Q2, the Markov regime-switching model identifies two distinct regimes of the KITM cycle: a high-growth regime and a low-growth regime, each with its own mean, variance, and duration. Moreover, in addition to the growth rate of tourist arrivals, the growth rate of international trade is found to be significant in keeping the KITM cycle in the high-growth regime. Empirical findings can offer essential information and policy implications for Korean government tourism policymakers and business managers.