Modeling inflation dynamics in the construction sector of a developing economy
Oyediran, Olukayode S.
The study observed the significance of price stability as economic goal in any economy. It therefore set out to determine in a non-rigorous dimension the inflationary dynamics in the construction sector of the Nigerian economy, using data on quarterly frequency from 1986 to 2003. The study employed three levels of construction data extraction and compares it with the national level statistics measures of inflation in the economy. It was found out that comparatively, the construction industry rate of growth in prices is higher than the economy wide rate of growth of inflation. Models of time the series and the composite price index were constructed. Using the consumer price index as a measure of the inflationary movement in this case, it has been established that the construction sector inflation is a little distance ahead. The simple linear regression model has further offered objective explanations of the relationship. The model can also be developed, by considering various specifications, stationarity properties and incorporating error correction mechanisms to provide economic related variable for estimating purposes The study has also shown the inflationary possibilities of various politico-economic regimes. It needs, however, to be further examined, the macroeconomic factors that predispose the construction prices to such perturbations. The study has also provided time series models that can be developed to interactive estimating tools for predicting future prices. However, further refinement of the models will be required after the econometrics properties must have been established
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