Intervention analysis and overseas trade in UK construction-related materials and components

The UK trade deficit in construction-related materials and components increased significantly over the period 1982-1 989 but fell during 1989-1 992. This paper examines the extent to which the apparent reversal in the trend is associated with changes in the level of UK economic activity. Intervention analysis is used to examine the relationship between both construction output and GDP and (i) the trade deficit and (ii) imports in the construction material and components industries. The results suggest that the recent improvement in the trade balance in these industries is likely to be a consequence of the recession in the UK economy rather than any fundamental change in international conpetitiveness.