A panel vector error correction approach to forecasting demand in regional construction markets

Jiang, Heng and Liu, Chunlu 2014, A panel vector error correction approach to forecasting demand in regional construction markets, Construction management and economics, vol. 32, no. 12, pp. 1205-1221, doi: 10.1080/01446193.2014.977800.

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Title A panel vector error correction approach to forecasting demand in regional construction markets
Author(s) Jiang, Heng
Liu, ChunluORCID iD for Liu, Chunlu orcid.org/0000-0003-1144-4355
Journal name Construction management and economics
Volume number 32
Issue number 12
Start page 1205
End page 1221
Total pages 17
Publisher Taylor & Francis
Place of publication Abingdon, England
Publication date 2014
ISSN 0144-6193
Keyword(s) construction demand
error correction model
panel causality
panel cointegration
regional markets
Summary Reliable forecasting as to the level of aggregate demand for construction is of vital importance to developers, builders and policymakers. Previous construction demand forecasting studies mainly focused on temporal estimating using national aggregate data. The construction market can be better represented by a group of interconnected regions or local markets rather than a national aggregate, and yet regional forecasting techniques have rarely been applied. Furthermore, limited research has applied regional variations in construction markets to construction demand modelling and forecasting. A new comprehensive method is used, a panel vector error correction approach, to forecast regional construction demand using Australia’s state-level data. The links between regional construction demand and general economic indicators are investigated by panel cointegration and causality analysis. The empirical results suggest that both long-run and causal links are found between regional construction demand and construction price, state income, population, unemployment rates and interest rates. The panel vector error correction model can provide reliable and robust forecasting with less than 10% of the mean absolute percentage error for a medium-term trend of regional construction demand and outperforms the conventional forecasting models (panel multiple regression and time series multiple regression model). The key macroeconomic factors of construction demand variations across regions in Australia are also presented. The findings and robust econometric techniques used are valuable to construction economists in examining future construction markets at a regional level.
Language eng
DOI 10.1080/01446193.2014.977800
Field of Research 120201 Building Construction Management and Project Planning
Socio Economic Objective 870101 Civil 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:30068240

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