| Title |
Effects on Business Cycles by Constructing Skyscrapers in Seoul |
| Authors |
Heo, Ja-Yun ; Kim, Hyun-Jung ; Jung, Chang-Mu |
| Keywords |
Skyscraper Curse ; VECM ; Veblen Effects ; Cointegration |
| Abstract |
Correlation between economic recession and skyscraper construction was revealed by Andrew Lawrence in 1999 : investments in skyscrapers peak when cyclical growth is exhausted and the economy is ready for recession. Moreover, there are some negative viewpoints on large-scale urban development project such as skyscrapers and large complexes : Skyscraper Curse, a myth about building a company's headquarters, and etc.. This study focuses on empirical analysis about correlation between skyscraper construction projects and urban economies, using Vector Error Correction Model with 2 endogenous and 2 exogenous variables focused in Seoul. On the estimated model, we performed Impulse-Response Analysis and Various Decomposition Analysis. As a result, we can find a significant correlation between constructing skyscrapers and regional economies. According to the empirical analysis, differenced GFA(gross floor area) of skyscrapers causes a negative effect to differenced GRDP temporarily. This study results are expected to be helpful tips not only for forecasting economic crisis but also for making important decisions whether investing the huge development project or not. |