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Market effects on forecasting construction prices using vector error correction models

Jiang, Heng, Xu, Youquan and Liu, Chunlu 2014, Market effects on forecasting construction prices using vector error correction models, International journal of construction management, vol. 14, no. 2, pp. 101-112, doi: 10.1080/15623599.2014.899128.

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Title Market effects on forecasting construction prices using vector error correction models
Author(s) Jiang, Heng
Xu, Youquan
Liu, ChunluORCID iD for Liu, Chunlu orcid.org/0000-0003-1144-4355
Journal name International journal of construction management
Volume number 14
Issue number 2
Start page 101
End page 112
Total pages 12
Publisher Taylor & Francis
Place of publication Abingdon, Eng.
Publication date 2014-01-01
ISSN 1562-3599
2331-2327
Keyword(s) construction price
financial crisis
forecasting
vector error correction model
Summary Construction price forecasting is an essential component to facilitate decision-making for construction contractors, investors and related financial institutions. Construction economists are increasingly interested in seeking a more analytical method to forecast construction prices. Although many studies have focused on construction price modelling and forecasting, few have considered the impacts of large-scale economic events and seasonality. In this study, an advanced multivariate modelling technique, namely the vector correction (VEC) model with dummy variables, was employed. The impacts of global economic events and seasonality are factored into the model to forecast the construction price in the Australian construction market. Research findings suggest that both long-run and dynamic short-term causal relationships exist among the price and levels of supply and demand in the construction market. These relationships drive the construction price and supply and demand, which interact with one another as a loop system. The reliability of forecasting models was examined by the mean absolute percentage error (MAPE) and the Theil's inequality coefficient U tests. The test results suggest that the conventional VEC model and the VEC model with dummy variable are both acceptable for forecasting the construction price, while the VEC model considering external impacts achieves higher prediction accuracy than the conventional VEC model. © 2014 © 2014 Taylor & Francis.
Language eng
DOI 10.1080/15623599.2014.899128
Field of Research 120203 Quantity Surveying
Socio Economic Objective 870102 Commercial Construction Planning
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2014, Taylor & Francis
Persistent URL http://hdl.handle.net/10536/DRO/DU:30067699

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