Ng, S T; Fan, R Y C and Wong, J M W (2011) An econometric model for forecasting private construction investment in Hong Kong. Construction Management and Economics, 29(5), pp. 519-534. ISSN 1466433X
Abstract
Acknowledging the importance of the private construction market and a close linkage between private construction investment, public sector output and general economic conditions, there is a strong motivation to develop reliable models to forecast private construction investment. Based on the Hong Kong scenario, two modelling approaches, namely the vector error correction (VEC) and the multiple regression models are developed and compared for their modelling accuracy and ability to handle non-stationary time series data. The result suggests that private construction investment in Hong Kong can be predicted by reference to public investment in construction, gross domestic product (GDP) and unemployment rate. All in all, the VEC model is considered more accurate and robust in handling non-stationary data. Through the VEC model, it is possible to confirm that the crowding-in effect of public work programmes, though minimal, is discernible in private construction investment in Hong Kong. Yet private construction investment is more sensitive to general economic conditions, as represented by GDP and unemployment rate. The GDP could represent the ability of investors to pay for construction items, while the unemployment rate is used as a proxy for the willingness of end-users to purchase the construction items. The models proposed should help policy and decision makers formulate suitable policies and strategies to sustain the construction industry in the medium to long run.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | crowding-in effect; private construction investment; regression analysis; stationarity; vector error correction model |
| Index terms: | construction market, regression analysis, modelling, construction industry, econometric, public work, vector error correction model, public sector, linkage, economic condition, gross domestic product, forecasting, investor, Hong Kong, multiple regression model, unemployment, accuracy, programme, motivation, strategy, time series |
| Subjects: | management, Geography, infrastructure engineering, professional development, project controls, market analysis, sociology, industry analysis, administrative law, statistical analysis, business, psychology, data science, economic analysis, prediction and forecasting, analytical methods |
| Topics: | Time Control, Legal Issues, Human Resources, Stakeholder Management, Business Strategy, Research Practice, Geographical Context, Information Management, Engineering Principles |
| Descriptive scope: | 4 PCTA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here