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The Texas construction sector: the tail that wagged the dog


  • D'Ann M. Petersen
  • Keith R. Phillips
  • Mine K. Yücel


The boom-to-bust days of the Texas construction industry will linger in people's memory for many years. D'Ann Petersen, Keith Phillips, and Mine Yucel examine the factors that led to the rise and fall of the Texas construction industry and determine the role the industry played in the state's volatile economy during the 1970s and 1980s. ; Petersen, Phillips, and Yucel employ an econometric model to analyze the roles residential and nonresidential construction played in the state's economic fluctuations from 1976 through 1990. The authors find that, although large swings in oil prices were the greatest source of economic instability in the Texas economy, the construction sector also played an important and independent role in the changing fortunes of the state. The authors' results show that the homebuilding sector, in particular, had a large impact on the Texas economy. In addition, the authors find that the state's economy needs several years to adjust to shocks in the construction industry. Consequently, the current expansion in residential construction is likely to have positive economic effects in the years ahead.

Suggested Citation

  • D'Ann M. Petersen & Keith R. Phillips & Mine K. Yücel, 1994. "The Texas construction sector: the tail that wagged the dog," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 23-33.
  • Handle: RePEc:fip:fedder:y:1994:i:qii:p:23-33

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    References listed on IDEAS

    1. Lynn E. Browne, 1992. "Why New England went the way of Texas rather than California," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 23-41.
    2. Kenneth Spong, 2000. "Banking regulation : its purposes, implementation, and effects," Monograph, Federal Reserve Bank of Kansas City, number 2000bria.
    3. Andrew C. Krikelas, 1992. "Why regions grow: a review of research on the economic base model," Economic Review, Federal Reserve Bank of Atlanta, issue Jul, pages 16-29.
    4. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    5. Edward Moscovitch, 1990. "The downturn in the New England economy: what lies behind it?," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 53-65.
    6. Follain James R. & Leavens Donald R. & Velz Orawin T., 1993. "Identifying the Effects of Tax Reform on Multifamily Rental Housing," Journal of Urban Economics, Elsevier, vol. 34(2), pages 275-298, September.
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    Cited by:

    1. Mohd Shahidan Shaari & Tan Lee Pei & Hafizah Abdul Rahim, 2013. "Effects of Oil Price Shocks on the Economic Sectors in Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 3(4), pages 360-366.

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    Construction industry ; Texas;


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