Analysis of the causal relation between construction activity and the gross domestic product of two neighbouring economies : Portugal and Spain
Conference Paper
Overview
Research
Additional Document Info
View All
Overview
abstract
It has long been recognised that the role of the construction industry in a country’s national
economy goes beyond its share in national output. Using time–series data drawn from the
United Nations national accounts databases, this study applies the econometric Granger
causality methodology to investigate the relationship between construction activity, measured
by the construction value added, and the Gross Domestic Product (GDP) of two neighbouring
economies – Portugal and Spain. In a comparison basis, the paper intends to identify the
existence of a causal relation between the construction sector and each one of the aggregate
economies. In particular, it tries to verify if the construction activity contributes to economic
growth and/or economic growth contributes to the dynamics of the construction industry activity
in these two countries. For both countries is find evidence that GDP growth leads the growth in
the construction sector, in the short and medium-run. The opposite is not observed.
