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Dynamic Modelling of the Building Cycle: 1. Theoretical Framework

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  • R Barras
  • D Ferguson

Abstract

The paper is a report on the second stage of a project designed to investigate the incidence and causes of postwar building cycles in the British economy. In the first stage spectral analysis was used to identify the main postwar cycles in each sector of building (industrial, commercial, and residential), and the second stage has been concerned with the development of a theoretical framework suitable for dynamic modelling of these cycles. The modelling framework incorporates both an endogenous cyclical mechanism of the type used in accelerator models of investment, to reflect the long production lags in building activity, and the exogenous influence on the building cycle of variations in economic factors such as gross domestic product and interest rates. The modelling technique used to formulate the theoretical framework is based upon a transfer-function model of the Box–Jenkins type, incorporating an error-correction mechanism to reproduce the short-run dynamics and long-run equilibrium relationships between the variables. The third stage empirical results of the model-building exercise are reported in a separate paper.

Suggested Citation

  • R Barras & D Ferguson, 1987. "Dynamic Modelling of the Building Cycle: 1. Theoretical Framework," Environment and Planning A, , vol. 19(3), pages 353-367, March.
    • Handle: RePEc:sae:envira:v:19:y:1987:i:3:p:353-367
    DOI: 10.1068/a190353
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    References listed on IDEAS

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    1. Nishimizu, Mieko & Quandt, Richard E. & Rosen, harvey S., 1982. "The demand and supply for investment goods: does the market clear?," Journal of Macroeconomics, Elsevier, vol. 4(1), pages 1-21.
    2. Currie, David A, 1981. "Some Long Run Features of Dynamic Time Series Models," Economic Journal, Royal Economic Society, vol. 91(363), pages 704-715, September.
    3. Davidson, James E H, et al, 1978. "Econometric Modelling of the Aggregate Time-Series Relationship between Consumers' Expenditure and Income in the United Kingdom," Economic Journal, Royal Economic Society, vol. 88(352), pages 661-692, December.
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    Cited by:

    1. Yannis Hatzikian & Eleftherios Bampasis, 2017. "Exploring the Relationship of Innovation Intensity, Knowledge Production and Productivity in Greek SMEs Before the Eruption of Debt Crisis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(1), pages 294-318, March.
    2. S Tsolacos & G Keogh & T McGough, 1998. "Modelling Use, Investment, and Development in the British Office Market," Environment and Planning A, , vol. 30(8), pages 1409-1427, August.
    3. Yanfang Sun & Haiyan Xie & Xirong Niu, 2019. "Characteristics of Cyclical Fluctuations in the Development of the Chinese Construction Industry," Sustainability, MDPI, vol. 11(17), pages 1-14, August.
    4. A J McGough & S Tsolacos, 1997. "The Stylised Facts of the UK Commercial Building Cycles," Environment and Planning A, , vol. 29(3), pages 485-500, March.
    5. J Coakley, 1994. "The Integration of Property and Financial Markets," Environment and Planning A, , vol. 26(5), pages 697-713, May.

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