The dynamic effects of the Asian financial crisis on construction demand and tender price levels in Singapore

Abstract

The paper aims to demonstrate the usefulness of applying a sophisticated technique to examine, by measuring, the dynamic effects of an external shock on the construction industry via two macro-level indicators. The time series for `value of contracts awarded' (or contractor's new orders), a proxy for demand for construction, and the `tender price index' are used for the analysis, with the Asian financial crisis as the intervention event. The methodology comprises five main stages to produce appropriate ARIMA models that describe the characteristic of the underlying process. The main advantage of the intervention analysis, as noted, is that the estimates of the effect are based on the entire series for `value of contracts awarded' or `tender price index', and not on a simple comparison of a few quarters' data.