1. Study Objectives and Method

▮ Research Background and Objectives

￮ The global economy has recently been facing the possibility of a severe recession due to impacts from such factors as COVID-19 and the restrictive monetary policies of major countries. Concerns about an economic crisis are rising, particularly in countries with emerging economies.

￮ Given this anticipated global economic downturn, South Korea's economy is expected to be significantly impacted due to its high dependency on external factors. Thus, the country faces an increased likelihood of an economic downturn due to domestic and international uncertainties. 

￮ There is a need for a dynamic analysis of the effects of macroeconomic factors on the local economy in preparation for a potential recession to minimize the risks and damages to regional economies caused by macroeconomic uncertainties. 

￮ Therefore, this study aims to provide a comprehensive analysis of the three-dimensional effects of macroeconomic uncertainties on the economy of Jeollabuk-do, suggesting proactive responses and policy measures to minimize potential damage and prepare for an economic downturn. 

▮ Research Scope and Methodology

￮ The spatial scope of the research focuses on the domestic and Jeollabuk-do regions, concentrating on areas related to the national and provincial economies. The temporal scope spans from 2024 to 2033.

￮ The research methodology integrates literature reviews, information surveys, case studies, and expert consultations to comprehensively analyze the dynamic relationship between Jeollabuk-do’s economy and macroeconomics.

2. Conclusion and Policy Suggestion

￮ A comprehensive analysis was conducted in line with the need to dynamically analyze the impacts of macroeconomics on the regional economy. This analysis used representative macroeconomic indicators in the industrial, economic, and financial sectors, along with key economic indicators for Jeollabuk-do in the regional, corporate, and household sectors. 

￮ Applying the Markov-Switching model to identify the macroeconomic crisis phases in the industrial, economic, and financial sectors revealed events such as the foreign exchange crisis (1997), the IT bubble burst (2000), the credit card crisis (2002), the financial crisis (2008), the US-China trade war (2018), the COVID-19 crisis (2020), and the LEGOLAND crisis (2022).

￮ The identified crisis phases in the three sectors were used to analyze the dynamic relationship between Jeollabuk-do's economy and macroeconomics. The DCC-GARCH model was applied to analyze this relationship in the industrial, economic, and financial sectors.

￮ The analysis revealed a consistent correlation between macroeconomic variables in the industrial, economic, and financial sectors and regional economic variables. However, during specific periods, including those of a crisis, the correlation showed sudden changes or reversals in direction.

￮ Using the VAR model to dynamically understand the impact of macroeconomics on the regional economy, the analysis indicated that shocks had the most significant reaction in several periods and then gradually decreased. Jeollabuk-do's economy primarily responded to shocks from its own variables, but macroeconomic variables in the industrial, economic, and financial sectors also exhibited some influence.

￮ Through a comprehensive analysis of the macroeconomic impact on Jeollabuk-do's regional economy, this study provides directions for proactive responses to minimize the risk of volatility in the regional economy due to macroeconomic uncertainties. The findings can serve as foundational data for minimizing potential damages to the regional economy in uncertain domestic and international economic situations, such as economic downturns or crises.​

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