THE SHORT CIRCLE IN RESIDENTIAL CONSTRUCTION, 1946--59.

The paper examines the determinants of short-run fluctuations in residential construction during the 1946-59 period. The paper explains how the short cycles are measured and describes some of their characteristics. It considers the relationship between fluctuations in residential construction and changes in the supply of mortgage credit. Many observers have noted that residential construction appears to be quite sensitive to credit conditions in the short run but little evidence for this relationship has yet been produced. The analysis is broadened to show the relationship between fluctuations in residential construction and in aggregate economic activity. Again, it has been widely noted that residential construction has had a generally stabilizing or counter-cyclical influence on the economy but no very adequate or complete explanation of this tendency has been provided. The procedure used to identify "cycles" in residential construction activity is similar to that used by the National Bureau of Economic Research, except in one respect. search, except in one respect. Cycles in residential construction are defined in terms of movements in three related series rather than only one, a movement is not recognized as "real" unless it is found in each of the series.