An approach to improve service trade account of Korea

Purpose The purpose of this paper is to quantitatively confirm whether hosting the Winter Olympic Games can improve tourism balance or increase the number of inbound tourists, and to discuss how Korea could maximize this opportunity. It also attempts to identify other critical variables for improving tourism balances and further suggests that the certain characteristics of participating nation’s patterns of medal wins at the Games should be better understood to contribute to attracting more tourists. Design/methodology/approach For the quantitative analyses of the relationship between tourism balance and the Games, Newey-West Hac estimation is used to correct autoregression for seven host countries of the Winter Olympic Games in last 24 years. For the analyses of characteristics of specialization in medal wins, conventional revealed comparative advantage model is used and tobit estimation method is applied. Findings This research confirms the role of hosting the Winter Games in improving tourism balance and increasing the number of inbound tourists. The findings from analyses on country specialization in sports largely coincide with the existing literature, however, in addition to confirming the well-established significance of key variables determining country performance like population and GDP, this study also discloses the role of other variables like team size and population density. Originality/value Major contributions of this paper are two-fold: it analyzes the Winter Olympic Games which was rarely tackled; and relates hosting the mega-sport events with the service trade account. As the host country of the 2018 Winter Olympic Games, the Republic of Korea has great potential to overcome that chronic deficit by attracting more inbound tourists. This study indicates how country characteristics of specialization can be used to enhance effectiveness of promotion strategy to attract a large number of foreign tourists to the PyeongChang Winter Games and consequently improve tourism balance.

A TWO-STAGE PLUG-IN BANDWIDTH SELECTION AND ITS IMPLEMENTATION FOR COVARIANCE ESTIMATION

The two most popular bandwidth choice rules for kernel HAC estimation have been proposed by Andrews (1991) and Newey and West (1994). This paper suggests an alternative approach that estimates an unknown quantity in the optimal bandwidth for the HAC estimator (called normalized curvature) using a general class of kernels, and derives the optimal bandwidth that minimizes the asymptotic mean squared error of the estimator of normalized curvature. It is shown that the optimal bandwidth for the kernel-smoothed normalized curvature estimator should diverge at a slower rate than that of the HAC estimator using the same kernel. An implementation method of the optimal bandwidth for the HAC estimator, which is analogous to the one for probability density estimation by Sheather and Jones (1991), is also developed. The finite sample performance of the new bandwidth choice rule is assessed through Monte Carlo simulations.