Construction Economics

Topics: Economic growth, Economics, Gross domestic product Pages: 8 (2380 words) Published: February 11, 2012
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Introduction World Construction Industry is one of the biggest industries in the whole world. The contribution of this industry towards the global GDP revolves around one-tenth of the total amount. World Construction Industry is also a potential employment generator and provides work to almost seven percent of the total employed person in the whole world. The extent of this industry has become so vast that the energy, in the form of electricity or fuel, consumed by it hovers around two-fifth of the total energy consumed all over the globe. The resources that are utilized in World Construction Industry is also staggeringly high and itself consumes fifty percent of the total world resources. Macroeconomics Literature review Macroeconomics is the study of the behaviour of the economy as a whole. It examines the forces that affect the firms, consumers and workers at the same time. The development of macroeconomics was one of the major breakthroughs of twentieth century economics, leading to a much better understanding of how to combat periodic economics crises and how to stimulate long-term economic growth. The major Macroeconomics goals are a high level and rapid growth of output, low unemployment and stable prices. 1) Macroeconomics on unemployment From time to time countries experience high unemployment that persists for long periods, some times as long as a decade. Macroeconomics examines the source of persistent unemployment. Having considered the possible diagnoses, macroeconomics also suggests remedies such as increasing aggregate demand or reforming labour market institution. 2) Macroeconomics on price inflation During the period of inflation, people get confused about the relative price and make mistakes in their spending and investment decisions. Tax burden may arise. People Spend much of their time worrying that inflation is eating at away their incomes. Macroeconomics policy has increasingly emphasized price stability as a key goal. Macroeconomics can suggest the proper role of monetary and fiscal policies, of exchange-rate system, and of an independent central bank in containing inflation. 3) Macroeconomics on rate of economic growth Macroeconomics is concerned with economic growth in which refers to the growth in the productive potential of an economy. An economy’s productive potential is the

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central factor in determining the growth in its real wages and living standards. Nation wants to know the ingredients in a successful growth recipe. Among the key factors in the rapid economic growth are the predominance of free market, high rates of savings and investment, low trade barriers, and a honest government with strong property rights. There are no simple formulas for resolving these dilemmas and Macroeconomics often differs on the proper approach to take when confronted with high inflation, rising unemployment or slow growth. However, sounds macroeconomics policies can help achieve a country’s economic objectives in the most effective manner. The relationship between construction industry and the macro-economy Wigren and Wilhelmsson (2007): examining the relationship between gross domestic product (GDP) and a broad group of construction and in addition the presence of crowding-out within the construction industry Public infrastructure policies influences on short-run economic growth, and slightly on long-run economic growth. Residential construction influences on long-run economic growth. Ortalo-Magne and Rady (2004): focusing on the drivers for transactions of residential properties using England and Wales as a case study Housing demand fluctuation takes a considerable role in housing transactions. Gauger and Snyder (2003) examining relationships between RFI, money, interest rates, and output in pre-deregulation and post-deregulation sub-periods. Short-term interest rate shocks account for much of RFI variability pre-deregulation. After deregulation, long-term FHA interest rate shocks...
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