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...

References: 1) Ahmed, Raisuddin and Mahabub Hissain(1984) “Development Impact of Rural Infrastructure in Bangladesh,” International Food Policy Research institute, Research Report 83. 2) Chia Fah Choy(2011):”Revisiting The ‘Bon Curve’ Construction Management And Economics” (July 2011) 29, 695–712 3) Coulson, N. and Kim, M. (2000), “Residential investment, non-residential investment and GDP”,Real Estate Economics, Vol. 28 No. 2, pp. 233-47. 4) EPW, (2004), National Accounts Statistics of India 1950-51 to 2002-03 (EPW Research Foundation: Mumbai). 5) Eric Mottu and Najla Nakhle (2010)”Lebanon: Real GDP Growth Analysis”, June 2010 6) Fred Moavenzadeh And Janet Ann Koch Rossow(1976):”The Construction Industry In Developing Countries”. Technology Adaptation Program 7) Gauger, J. and Snyder, T. (2003), “Residential fixed investment and the macro economy: has deregulation altered key relationships?”, Journal of Real Estate Finance and Economics,Vol. 27 No. 3, pp. 335-54. 8) Jorge Pedro Lopes(1997):” Interdependence Between The Construction Sector And The National Economy In Developing Countries: A Special Focus On Angola And Mozambique “,Submitted In Partial Fulfilment For The Degree Of Doctor Of Philosophy, May 1997. 9) Ortalo-Magne, F. and Rady, S. (2004), “Housing transactions and macroeconomic fluctuations: a case study of England and Wales”, Journal of Housing Economics, Vol. 13 No. 4, pp. 287-303. 10) Ozay Mehmet & Vedat Yorucu (2008):” Explosive Construction In A Micro‐State: Environmental Limit Andthe Bon Curve: Evidence From North Cyprus”, Construction Management And Economics, 26:1, 79-88 11) Ramesh Ramsaran And Roger Hosein (2005) “Growth, Employment And The Construction Industry In Trinidad And Tobago” Department Of Economics, University Of The West Indies, St Augustine, Trinidad & Tobago 12) Samuelson and Nordhans(2005) Economics.18th edn New Delhi. 13) Scott Hazelton (2008), “Global Construction and the World Economy” Global Insight Construction Seminar, 23 September 2008, Frankfurt
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14) Wibowo, Agung (2009) “The Contribution Of The Construction Industry To The
Economy Of Indonesia: A Systemic Approach”. Discussion Paper Construction Management, Indonesia.
15) Wigren, R. and Wilhelmsson, M. (2007), “Construction investments and economic growth in Western Europe”, Journal of Policy Modeling, Vol. 29 No. 3, pp. 439-51.
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