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Causal relationship between construction flows and GDP: evidence from Hong Kong

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  • Raymond Tse
  • Sivaguru Ganesan
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    Abstract

    Granger causality methodology is used to investigate lead-lag relationships between construction activity and aggregate economy. Using data from Hong Kong, the results of this paper suggest strongly that the GDP tends to lead the construction flow not vice versa. Our finding is contrary to the view that construction is more volatile than the GDP. However, our results show that the construction volatility after 1990 is smaller than that in the period 1983-1989, a result that is particularly important for policymakers in that it is the macroeconomic policy of government that affects output, and influences the construction activity, and not vice versa.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/014461997372926
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Construction Management and Economics.

    Volume (Year): 15 (1997)
    Issue (Month): 4 ()
    Pages: 371-376

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    Handle: RePEc:taf:conmgt:v:15:y:1997:i:4:p:371-376

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    Web page: http://www.tandfonline.com/RCME20

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    Related research

    Keywords: Unit Root Test; Causality; Hong Kong;

    References

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    1. Ng, Serena, 1995. "Testing for Homogeneity in Demand Systems When the Regressors Are Nonstationary," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(2), pages 147-63, April-Jun.
    2. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    3. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
    4. Ashley, R & Granger, C W J & Schmalensee, R, 1980. "Advertising and Aggregate Consumption: An Analysis of Causality," Econometrica, Econometric Society, vol. 48(5), pages 1149-67, July.
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    Cited by:
    1. Charles Ka Yui Leung & Kelvin S. Wong, 2004. "The Construction and Related Industries in a Changing Socio-Economic Environment: The case of Hong Kong„X," Discussion Papers 00011, Chinese University of Hong Kong, Department of Economics, revised May 2005.
    2. Chang, Tsangyao & Nieh, Chien-Chung, 2004. "A note on testing the causal link between construction activity and economic growth in Taiwan," Journal of Asian Economics, Elsevier, vol. 15(3), pages 591-598, June.
    3. Chan Swee Lean, 2001. "Empirical tests to discern linkages between construction and other economic sectors in Singapore," Construction Management and Economics, Taylor & Francis Journals, vol. 19(4), pages 355-363.

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