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The effects of money supply on construction flows

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Author Info
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.

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

Volume (Year): 19 (2001)
Issue (Month): 1 (January)
Pages: 9-17
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Handle: RePEc:taf:conmgt:v:19:y:2001:i:1:p:9-17

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Related research
Keywords: Construction Money Supply Causality Asymmetric Effect Hong Kong;

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    Other versions:
  2. Raymond Y.C. Tse, Sivaguru Ganesan, 1997. "Causal relationship between construction flows and GDP: evidence from Hong Kong," Construction Management & Economics, Taylor and Francis Journals, vol. 15(4), pages 371-376, July. [Downloadable!] (restricted)
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  4. Swanson, Norman R., 1998. "Money and output viewed through a rolling window," Journal of Monetary Economics, Elsevier, vol. 41(3), pages 455-474, May. [Downloadable!] (restricted)
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  6. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March. [Downloadable!] (restricted)
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  21. Bernanke, Ben S & Blinder, Alan S, 1992. "The Federal Funds Rate and the Channels of Monetary Transmission," American Economic Review, American Economic Association, vol. 82(4), pages 901-21, September. [Downloadable!] (restricted)
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  22. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254. [Downloadable!] (restricted)
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