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JUE Insight: Shovel ready projects and commercial construction activity’s long and variable lags
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DOI：10.1016/j.jue.2025.103816.png)
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Abstract
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We use microdata on the phases of commercial construction projects to document three facts regarding the sector’s time-to-plan lags: (1) plan times are long and highly variable, (2) nearly half of projects in planning are abandoned, and (3) property-price appreciation reduces the likelihood of abandonment. We present a tractable model of endogenous planning starts and abandonment that can match these facts. The model has the testable implication that supply is more elastic when there are more “shovel ready” projects ready for construction. We use local projections to validate this prediction in a panel dataset for US cities.
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