Tourist arrivals in Korea: Hallyu as a pull factor

Econometric modelling on tourist arrivals has concentrated mostly on forecasting. We abstract and assess the impact on arrivals to Korea from China, Hong Kong, Indonesia, Japan, Taiwan, Singapore and Malaysia using a number of
macroeconomics variables (unemployment, inflation, GDP and exchange rate)
sentiment, mood and most importantly ‘Hallyu’ (Korean cultural wave) which is
quantified for the very first time. Effectively, we test how each variable ‘measures up’ against all other variables. Our analysis is twofold. Firstly, we use impulse response functions to assess the risk, magnitude and duration that each shock has on short-term arrivals from each country separately. Secondly, we concentrate on systemic effects and use causality tests to examine the effect of each variable on arrivals for all countries simultaneously. We find that the effect of our variables is not uniform but most importantly that ‘Hallyu’ cannot be ignored.