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Construction crises and business cycle: consequences for GDP forecasts

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  • E. Monnet
  • C. Thubin

Abstract

How do we take into account the specificities of the construction sector to forecast GDP growth? Construction activity is usually highly correlated with the economic cycle, both upswings and downswings. However, during construction-specific crises, its developments differ markedly from those of the other sectors as in the early 1990s and from 2011 to 2015. The risk of making a construction-related error when forecasting GDP then increases for forecasting models that are mainly or exclusively based on manufacturing surveys - as is the case with the current quarter forecasting model (ISMA) at the Banque de France. A "safeguard" model, which isolates the value added of each sector, has been constructed to overcome this type of limitation and thus improve the results.

Suggested Citation

  • E. Monnet & C. Thubin, 2017. "Construction crises and business cycle: consequences for GDP forecasts," Rue de la Banque, Banque de France, issue 39, february..
    • Handle: RePEc:bfr:rueban:2017:39
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    References listed on IDEAS

    as
    1. C. Thubin & T. Ferrière & E. Monnet & M. Marx & V. Oung, 2016. "The PRISME model: can disaggregation on the production side help to forecast GDP?," Working papers 596, Banque de France.
    2. E. Monnet & C. Wolf, 2016. "Demographic Cycle, Migration and Housing Investment: a Causal Examination," Working papers 591, Banque de France.
    3. Mogliani, Matteo & Darné, Olivier & Pluyaud, Bertrand, 2017. "The new MIBA model: Real-time nowcasting of French GDP using the Banque de France's monthly business survey," Economic Modelling, Elsevier, vol. 64(C), pages 26-39.
    4. Bec, Frédérique & Mogliani, Matteo, 2015. "Nowcasting French GDP in real-time with surveys and “blocked” regressions: Combining forecasts or pooling information?," International Journal of Forecasting, Elsevier, vol. 31(4), pages 1021-1042.
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