The Economic Costs of Diplomatic Conflict

Hyejin Kim () and Jungmin Lee ()
Additional contact information
Hyejin Kim: Economic Research Institute, Bank of Korea
Jungmin Lee: Department of Economics, Seoul National University

No 2020-25, Working Papers from Economic Research Institute, Bank of Korea

Abstract: We examine the economic impact of the diplomatic conflict using the THAAD crisis between South Korea and China as a case study. Using the synthetic control method, we estimate the conflict¡¯s impacts on Chinese tourists to Korea and stock prices of China-related Korean firms. We find that a negative effect on the inflow of tourists appeared with a lag of 3 months after the announcement of the decision and persisted for about 18 months. On the other hand, the impacts on the stock market appeared immediately, but insignificant and short-lived.

Keywords: Economic Sanction; Geopolitical Events; Tourism; Stock Market; South Korea; China; Synthetic Control Method (search for similar items in EconPapers)
JEL-codes: F51 P16 Z30 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2020-11-26
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.bok.or.kr/ucms/cmmn/file/fileDown.do?m ... 00000020673&fileSn=1 Working Paper, 2020 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bok:wpaper:2025

Access Statistics for this paper

More papers in Working Papers from Economic Research Institute, Bank of Korea Contact information at EDIRC.
Bibliographic data for series maintained by Economic Research Institute ().