Examinations of the Restructured Korea Economy

In this paper, the constant conditional correlation(Bollerslev, 1990)-multivariate threshold GARCH(Glosten, Jaganathanm and Runkle, 1993) procedure is used to model the relationship between the renovated Korea economies and asymmetry effects after the financial crisis. These is one hypothesis: the insulation effect hypothesis. In terms of shortand long-run domestic shock and foreign shock, volatility of short-run domestic increases by 0.0261, while that of short-run foreign shocks decreases. However, volatility of long-run shock decreases for domestic and foreign shocks, respectively. Therefore, these results indicate that stable Korea economy has better insulation effects for the long-run period.