{
  "title": "The Driving Force behind the Boom and Bust in Construction in Europe",
  "publication": "IMF Working Papers, August 21, 2013",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/the-driving-force-behind-the-boom-and-bust-in-construction-in-europe-40883",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2016/12/31/the-driving-force-behind-the-boom-and-bust-in-construction-in-europe-40883",
  "overlayPath": "/en/publications/wp/issues/2016/12/31/the-driving-force-behind-the-boom-and-bust-in-construction-in-europe-40883/index.md",
  "summary": "This paper studies the factors behind pro-cyclical but widely varying construction shares (as a percent of GDP) across countries, with a strong focus on European countries.",
  "sections": [
    {
      "heading": "Summary and research question",
      "content": "- Examines factors behind pro-cyclical but widely varying construction shares (as a percent of GDP) across countries, with a strong focus on European countries.\n- Uses a dataset covering 48 countries (including advanced and emerging economies within and outside Europe) for 1990-2011.\n- Objective: identify determinants of a \"norm\" around which actual construction shares revolve using a simple AR(1) and error-correction process."
    },
    {
      "heading": "Data and methodology",
      "content": "- Sample: 48 countries for 1990-2011.\n- Estimation approach: AR(1) and error-correction process to model adjustment dynamics of construction share.\n- Key explanatory factors investigated: geography, demographics, and economic conditions."
    },
    {
      "heading": "Key empirical findings",
      "content": "- Country’s geography, demographics, and economic conditions are the key determinants of a norm for construction share.\n- In many European countries, construction shares overshot relative to their norms before the recent global crisis.\n- Construction shares have fallen significantly since the crisis.\n- Some countries still have room for further adjustment in construction shares, which may weigh on economic recovery."
    },
    {
      "heading": "Policy implications and interpretation",
      "content": "- Overshooting of construction shares prior to the global crisis implies potential for further downside adjustment in some countries.\n- Further adjustment in construction shares could act as a drag on economic recovery in affected countries.\n- Monitoring norms and adjustment dynamics (via AR(1) and error-correction frameworks) can inform macroeconomic and sectoral policy responses."
    },
    {
      "heading": "Keywords and subjects (as listed)",
      "content": "- Subjects: Capital spending, Expenditure, Financial markets, Housing, Income, National accounts, Stock markets\n- Keywords: adjustment dynamics of construction share; adjustment in construction share; Business Cycle; Capital spending; Construction; construction share; construction share norm; Error-correction; estimated construction share norm; Europe; European Growth; Housing; Income; increase in construction share; medium-term norm; norm equation; norm vis-a-vis; share norm equation; share of construction; significance level; Stock markets; WP\n\n---\n\n Content in this bundle\n\n- wp13181 - Executive Summary\n  - wp13181 - Executive Summary (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp13181 - Executive Summary (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-driving-force-behind-the-boom-and-bust-in-construction-in-europe-40883"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2016/12/31/the-driving-force-behind-the-boom-and-bust-in-construction-in-europe-40883/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2016/12/31/the-driving-force-behind-the-boom-and-bust-in-construction-in-europe-40883/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2016/12/31/the-driving-force-behind-the-boom-and-bust-in-construction-in-europe-40883/bundle-manifest.json)",
    "Authors: Yan M Sun, Pritha Mitra, Alejandro Simone",
    "Published: August 21, 2013",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484392485.001",
    "Examines factors behind pro-cyclical but widely varying construction shares (as a percent of GDP) across countries, with a strong focus on European countries.",
    "Uses a dataset covering 48 countries (including advanced and emerging economies within and outside Europe) for 1990-2011.",
    "Objective: identify determinants of a \"norm\" around which actual construction shares revolve using a simple AR(1) and error-correction process.",
    "Sample: 48 countries for 1990-2011.",
    "Estimation approach: AR(1) and error-correction process to model adjustment dynamics of construction share.",
    "Key explanatory factors investigated: geography, demographics, and economic conditions.",
    "Country’s geography, demographics, and economic conditions are the key determinants of a norm for construction share.",
    "In many European countries, construction shares overshot relative to their norms before the recent global crisis.",
    "Construction shares have fallen significantly since the crisis.",
    "Some countries still have room for further adjustment in construction shares, which may weigh on economic recovery.",
    "Overshooting of construction shares prior to the global crisis implies potential for further downside adjustment in some countries.",
    "Further adjustment in construction shares could act as a drag on economic recovery in affected countries.",
    "Monitoring norms and adjustment dynamics (via AR(1) and error-correction frameworks) can inform macroeconomic and sectoral policy responses.",
    "Subjects: Capital spending, Expenditure, Financial markets, Housing, Income, National accounts, Stock markets",
    "Keywords: adjustment dynamics of construction share; adjustment in construction share; Business Cycle; Capital spending; Construction; construction share; construction share norm; Error-correction; estimated construction share norm; Europe; European Growth; Housing; Income; increase in construction share; medium-term norm; norm equation; norm vis-a-vis; share norm equation; share of construction; significance level; Stock markets; WP",
    "**_wp13181 - Executive Summary**"
  ],
  "related": [
    {
      "title": "_wp13181 - Executive Summary",
      "role": "document",
      "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2013/_wp13181.pdf",
      "summary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2013/_wp13181.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2013/_wp13181.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2016/12/31/the-driving-force-behind-the-boom-and-bust-in-construction-in-europe-40883/index.md",
    "json": "/en/publications/wp/issues/2016/12/31/the-driving-force-behind-the-boom-and-bust-in-construction-in-europe-40883/index.json",
    "bundleManifest": "/en/publications/wp/issues/2016/12/31/the-driving-force-behind-the-boom-and-bust-in-construction-in-europe-40883/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-18T07:13:34.485Z"
}