Office Building Investment and the Macroeconomy: Empirical Evidence, 1973–1985 |
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Authors: | John L Kling Thomas E McCue |
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Institution: | Mclntire School of Commerce, University of Virginia, Monroe Hall, Charlottesville, Virginia 22903.;School of Government and Business Administration, Department of Business Administration, George Washington University, Washington, D.C. 20052. |
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Abstract: | Given the recent concern about overbuilding in the office sector, this paper considers the influence that macroeconomic factors have upon office construction. Because office construction is volatile and because the "time to build" problem requires construction to change with a lag, the paper employs a different methodology, vector autoregressions, to model the office building sector. The findings indicate that anticipated output has a large and direct effect. This effect depends on the predictive content of nominal interest rates, suggesting that the declines in nominal rates over the past five years explains the recent overbuilding. |
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