Comparison of Different Methods of Constructing Housing Start Index in the Philippines

Year: 2014       Vol.: 63       No.: 1      

Authors: Felicidad Hebron

Abstract:

We investigate three methods of constructing housing start index with a fixed base year. In the Philippines, researchers and planners uses data on building permits to monitor construction sites where economic activities are expected to follow. Suppliers of construction materials such as cement, lumber, steel, among others, rely on these data for planning purposes. Other businesses like banks and food chains also use these data as proximate indicators of supply and demand for investment. A mixed model accounting the empirical relations between the index and other economic indicators they usually lead is used in the assessment of the index resulting from three different methods. There is a strong space-time association between the index and other indicators, confirming the relationship between the economic boom and housing start index. There is evidence that the index is capable of leading some key economic indicators.

Keywords: housing start index, leading indicators, mixed models

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