Working Paper Revision
Shovel Ready Projects and Commercial Construction Activity’s Long and Variable Lags
Abstract: We use microdata on the phases of commercial construction projects to document three facts regarding the sector's time-to-plan lags: (1) plan times are long and highly variable, (2) nearly half of projects in planning are abandoned, and (3) property price appreciation reduces the likelihood of abandonment. We write down a tractable model of endogenous planning starts and abandonment that can match these facts. The model also has the testable implication that supply is more elastic when there are more "shovel ready" projects ready for construction. We use local projections to validate this prediction in the cross-section for US cities.
JEL Classification: R33; E22; E32; L74;
https://doi.org/10.17016/FEDS.2024.016r1
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File(s): File format is application/pdf https://www.federalreserve.gov/econres/feds/files/2024016r1pap.pdf
Bibliographic Information
Provider: Board of Governors of the Federal Reserve System (U.S.)
Part of Series: Finance and Economics Discussion Series
Publication Date: 2025-06-25
Number: 2024-016r1
Note: Revision
Related Works
- Working Paper Revision (2025-06-25) : You are here.
- Working Paper Original (2024-04-04) : On Commercial Construction Activity's Long and Variable Lags