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The effects of money supply on construction flows

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  • Raymond Y.C. Tse
  • John Raftery

Abstract

It is argued that money/credit supply is neutral with respect to the real sector. Existing studies have focused on the relationship between money supply and national output. However, this paper using data from Hong Kong (first quarter 1983-second quarter 1997) examines the extent to which fluctuations in the money supply cause (or Granger-cause) fluctuations in real construction activity. Specifically, it is found that: (i) construction activity flows and construction loans are cointegrated, but their lead-lag relationship cannot be established; (ii) there is a specific and strong causal relationship between the construction activity and the broadly defined money supply M3; and (iii) positive money-supply shocks have a larger effect on construction output than negative money-supply shocks.

Suggested Citation

  • Raymond Y.C. Tse & John Raftery, 2001. "The effects of money supply on construction flows," Construction Management and Economics, Taylor & Francis Journals, vol. 19(1), pages 9-17, January.
    • Handle: RePEc:taf:conmgt:v:19:y:2001:i:1:p:9-17
    DOI: 10.1080/014461901452049
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    References listed on IDEAS

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    Cited by:

    1. Le Ma & Chunlu Liu, 2014. "Did the late-2000s financial crisis influence construction labour productivity?," Construction Management and Economics, Taylor & Francis Journals, vol. 32(10), pages 1030-1047, October.
    2. Charles K. Leung & Kelvin S. Wong, 2004. "The Construction and Related Industries in a Changing Socio-Economic Environment: The Case of Hong Kong," International Real Estate Review, Global Social Science Institute, vol. 7(1), pages 139-170.
    3. Owolabi A. Usman & Adegbite Tajudeen Adejare, 2014. "Impact of Monetary Policy on Industrial Growth in Nigeria," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(1), pages 18-31, January.
    4. Chin-Oh Chang & Ming-Chi Chen, 2014. "Construction financing in Taiwan: current state and policy regime," Chapters, in: Susan Wachter & Man Cho & Moon Joong Tcha (ed.), The Global Financial Crisis and Housing, chapter 8, pages 180-207, Edward Elgar Publishing.

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