Research On The Effect Of Inflation To Construction Costs

Nowadays, economic development brings people high income with theinevitable occurrence of inflation. In period of inflation, the price of buildingmaterials, machinery, workers’ salary and so on also have different levels of rising.Therefore, it is necessary for construction enterprises to know about the impact ofinflation on the coming construction cost as well how to deal with inflation.In this thesis, firstly, I introduce the definition and measure of inflation, tell thecost of constructing projects from the construction cost and simply introduce andsimply introduce the unit root test, co-integration test and the theory of grangercausality test. In addition, I also study the influence of inflation on the constructionmaterial cost and construction workers’ wages basing on the method of quantitativeresearch. In my paper, I select steel and cement which take up much percent as theresearch objects because there are so many types of building materials. UsingEviews6.0software to research the relationship between inflation and the workers’salary in construction industry or major construction materials and constructionmechanical prices of Xiamen, and build the regression equation between them.There is a long-term equilibrium relationship between the consumer price indexand rebar prices, which is CPI=30.08629+0.677822CPI(-1)+0.00077LWG, and thedegree of fitting is84.7%. And there is also a long-term equilibrium relationshipbetween Consumer price index (CPI) and round bar composite price (YG), which isCPI=88.38346+0.003373YG, and the degree of fitting can reach up to84.9%. Theconsumer price index is the Grange reason of round bar and rebar’s composite price,so the predicted consumer price index can be used to forecast the composite price ofround bar and rebar. The researches show that there is no long-term equilibriumrelationship among the consumer price index, cement prices or construction workers’wages and construction mechanical prices of Xiamen. Finally I summarize somemeasures against the risk of inflation for construction enterprises during the period ofinflation.