This study uses the cointegration and error correction approach to analyse the long-run and short-run inbound tourism demand in South Korea by four major tourist-generating countries: Japan, US, UK, and Germany. The estimated income elasticities ranging from 1.5 to 3.0 in the long-run models imply that travelling to South Korea is a luxurious tourist good for residents of the four tourist-generating countries in question. The trade volume variable is found to be significant in all models whereas the return air fare is only significant in the Japanese equation. The prices/costs of tourism in Korea also play a significant role in determining the number of tourists visiting Korea from the US and UK, but this is not the case for Japanese and German tourists. In terms of the significance of substitution prices in the demand models, Malaysia and China turn out to be the most favorite substitute destinations whereas Singapore and Thailand are found to be complementary destinations. The ex post forecasts with four different time horizons are generated from seven model specifications and the results show that the error correction model in general outperforms other models, though the ARIMA(p,q) and VAR models provide reasonable forecasts for certain time horizons.
|Publication status||Published - 1998|
- inbound travel
- international comparisons
- market segmentation