Forecasting construction demand : a vector error correction model with dummy variables

Jiang, Heng and Liu, Chunlu 2011, Forecasting construction demand : a vector error correction model with dummy variables, Construction management and economics, vol. 29, no. 9, pp. 969-979.

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Title Forecasting construction demand : a vector error correction model with dummy variables
Author(s) Jiang, Heng
Liu, Chunlu
Journal name Construction management and economics
Volume number 29
Issue number 9
Start page 969
End page 979
Total pages 11
Publisher Routledge
Place of publication Abingdon, U. K.
Publication date 2011-09
ISSN 0144-6193
1466-433X
Keyword(s) construction demand
forecasting
vector error correction model
global financial crisis
Summary Modelling the level of demand for construction is vital in policy formulation and implementation as the construction industry plays an important role in a country’s economic development process. In construction economics, research efforts on construction demand modelling and forecasting are various, but few researchers have considered the impact of global economy events in construction demand modelling. An advanced multivariate modelling technique, namely the vector error correction (VEC) model with dummy variables, was adopted to predict demand in the Australian construction market. The results of prediction accuracy tests suggest that the general VEC model and the VEC model with dummy variables are both acceptable for forecasting construction economic indicators. However, the VEC model that considers external impacts achieves higher prediction accuracy than the general VEC model. The model estimates indicate that the growth in population, changes in national income, fluctuations in interest rates and changes in householder expenditure all play significant roles when explaining variations in construction demand. The VEC model with disturbances developed can serve as an experimentation using an advanced econometrical method which can be used to analyse the effect of specific events or factors on the construction market growth.
Language eng
Field of Research 120201 Building Construction Management and Project Planning
Socio Economic Objective 870199 Construction Planning not elsewhere classified
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2011, Taylor & Francis
Persistent URL http://hdl.handle.net/10536/DRO/DU:30040575

Document type: Journal Article
Collection: School of Architecture and Built Environment
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