ABSTRACT
The relationship between demand and price is a recurring theme in the literature on the built environment. It is appropriate, therefore, to include a chapter on fluctuations in demand levels and how to forecast them. To gain insight into the cyclical development of business cycles, the researcher should follow Keynes’ famous dictum: the economist ‘. . . must study the present in the light of the past for the purposes of the future’. Of course, there are many ways of studying the future. In ancient times, kings consulted the Oracle at Delphi. In modern times we make use of such methods as time series analysis, econometric modelling, extrapolation, the Delphi technique, scenario planning, trend-and cross-impact analysis, probabilistic system dynamics, technological forecasting and early warning systems, to name a few. Time series analysis and econometric modelling are commonly found in developed countries as an aid to macroeconomic analysis and forecasting. In this chapter, the primary focus will be on time series analysis and leading economic indicators. Two streams have developed in the search for useful leading economic indicators. The quantitative approach dominates research in the US. The qualitative approach (business survey method) prevails in Europe. Yet many economic forecasting bodies integrate quantitative and qualitative data quite usefully in short-term forecasting models.
