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건설경기 종합지수 개발 연구 (A study on the business cycle composited index in the construction market)

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  • 건설경기 종합지수 개발 연구 (A study on the business cycle composited index in the construction market)
  • 김재영; 김민철
  • 국토연구원


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Title 건설경기 종합지수 개발 연구 (A study on the business cycle composited index in the construction market)
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Material Type Reports
Author(Korean)

김재영; 김민철

Publisher

경기:국토연구원

Date 2002
Pages 116
Language Korean
File Type Link
Original Format pdf
Subject Industry and Technology < Construction
Holding 국토연구원

Abstract

Introduction

There are various variables in the construction market. Each variable has its own trend and dynamic movement. So far analysts' main concern is the prediction and forecast of the each variable. Some analysts report that current regime keep in recession, others say it conversely. We therefore need to reach some consensus about co-movement of various variables in construction market, thus forming a definition of construction business cycle.
Since economic crisis in 1997, the construction business cycle has been depicted as a different pattern from the national economy business cycle. We therefore need to study the construction business cycle itself independently.
This study aims to composite the construction business cycle index. From the composite index, we extract shift points of the standard regime, i.e. peak and trough. Finally we specify the current regime, and predict the peak point.
From some pre-studies on the construction business cycle, we get shift points of the temporary standard regime. We use this result as a criterion to evaluate many simulations. There are no ready made reference cycle to evaluate many simulated composite indexes. Thus shift points of the temporary standard regime, which we got from pre-studies, can be the second best alternative.

Construction Business Cycle Indicators

The definition of the construction business cycle consists of two steps. Phase 1 is the definition of construction activity, and phase 2 is the process of index composition. This chapter corresponds to phase 1 i.e. the definition of construction activity. We gathered indicators related with construction activities. From now on we call these indicators as construction activity indicators. The construction activity indicators were grouped by two ways. One of the grouping method is the life cycle of the facilities, the other is the sub-markets. By gathering the construction activity indicators we set the potential boundary of construction activity. We choose the sub-market grouping method. We divide the construction market into 5 sub-markets, that is, production, labor, consumption, material, and financial market.
Among the construction activity indicators, we select the construction business cycle indicators. The construction indicators are candidate indicators to combine indicators for the simulation.
We apply 5 ante-criteria to select the construction business cycle indicators among the construction activity indicators, that is, economic significance, statistical adequacy, currency, conformity to national economy business cycle, and conformity to construction business cycle. Finally chosen indicators are order received for construction, floor area permitted for building construction, employment in construction industry, monthly wage of a construction employee, domestic cement consumption, and other indicators in material market.

Composition of the Construction Business Cycle Indicators

We have already used the ante-criteria. In this chapter we tried to simulate composition using various combination of candidate indicators. The post-criterion to select the best combination is the goodness to fit for shift points of the standard regime which we got from the pre-studies.
One of the conditions for the best composite index is appropriate combination and the other is the good methodology. The two conditions should be considered simultaneously. But some methodologies, like Stock-Watson model and MSF(Markov Switching Factor) model, have computational burden. Stock-Watson model is a statistical model, where 'statistical' means that the model needs statistical estimation process. MSF model is not only statistical but also non-linear. Therefore we treat separately the two problems, i.e. combination problem and methodology problem.