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The purpose of this study is to examine the correlations between Taiwan's business cycles and construction costs from 1994 to 2021. The empirical results are as follows: (1) The peaks of the ten construction cost indices, including cement, gravel, tiles and ceramics, metal products, wood products, plastic products, paint finishing, electromechanical equipment, asphalt products, and miscellaneous items, lag behind the business cycle’s peaks. (2) Five price indices, including cement, gravel, tiles and ceramics, paint finishing, and asphalt products, lead the business cycles in reaching their bottoms, indicating that these indices reflect changes in economic conditions earlier. (3) Six indices, including cement, gravel, tiles and ceramics, paint finishing, asphalt products, and miscellaneous, lag behind and lead the business cycles in reaching their peaks and bottoms, respectively. (4) The volatility of the ten construction cost indices is low during peaks or bottoms of the business cycle. The findings are robust to using the stock market index to measure the business cycles. |