Academic literature on the topic 'Real estate activity'

Securitized equity interests in commercial property (the so-called listed REIT market) across a number of countries are analyzed. In so doing, we have pulled together financial as well as real economic data from a large number of different sources. On the real side, we focus particularly on office property construction, as data are fairly available in that sector. The comparison of REIT markets across countries reveals significant variation in terms of institutional characteristics, but many similarities in terms of financial performance. Office construction activity also displays some synchronicity across countries, with a general pattern of reduced levels and volatility in construction activity over the past two decades. Linkages between REIT market development and the dynamics of new construction activity are explored.

With the ongoing global financial crisis -which began with the collapse of the US sub-prime market in 2007 - the Barbadian economy is expected to contract in 2009. As a means of stimulating economic activity and providing job opportunities, the government has committed itself to completing 572 houses during the 2009/10 financial year. However, the arguments in favour of allocating more resources to residential construction have not been based on the existence of empirical analyses. This paper empirically investigates the relationship between residential construction and economic growth for Barbados. The historical data suggests that there is bi-directional causality between economic growth and residential construction. Hence, a policy that stimulates the housing market may boost economic activity.

This paper studies the evolution of property values and the connections between shadow banking and property markets in China. We use Pooled Mean Group estimation to analyze Chinese house prices in 65 cities from 2007-2016, define the "fundamentals¨ of housing prices with the Gordon dividend discount model, and use lagged rents, prices, real and nominal interest rates, and shadow banking activity as short term explanatory factors. We find that the cities tend to share long run fundamentals and adjust relatively quickly to deviations from the fundamentals. We do not find bubbles; rather houses are like growth stocks with house prices rapidly chasing growing rents. More importantly, we find that house prices increase more quickly with the availability of shadow banking funds, which have grown rapidly.

Most elderly Finnish residents prefer to age in place, but some relocate because of push factors that create stress in their current homes and pull factors that attract them to a new dwelling. This survey examines the important pull factors that attract seniors to senior houses. Grocery nearby is the strongest pull factor followed by hospital or medical center and public transportation. A factor analysis reveals that attributes can be grouped into three factors: onsite services that allow the residents to maintain an active lifestyle with some luxury, everyday services and facilities that would enable aging in place, and physical activity facilities. Residents have chosen the type of senior housing that supports their lifestyle. Meanwhile, socioeconomic characteristics do not explain the differences in the types of features that attract residents.

Studies on the calibration of subjective probabilities find that people tend to over-estimate the precision of their knowledge. In this paper we develop a semi-rational model and apply it to the real estate markets in Hong Kong and other Asian countries. The key point is that a person is rational about her/his private information until her/his private information is confirmed by a clearly defined market signal. Using a pre-sale as a mechanism of updating a developer's beliefs, this paper analyzes the impact of over-confidence on overbuilding and cycles in real estate markets. Our finding indicates that a pre-sale activity will increase the magnitude of over-building and over-confidence will increase the volatility in real estate markets. Our model also has implications to the well-established literature dealing with the issue of over-capacity in many industrial sectors.

This paper studies the Swiss housing price determinants. The Swiss housing economy is reproduced by employing a macro- series from the last seventeen years and constructing a vector-autoregressive model. Conditional on a comparatively broad set of fundamental determinants considered, i.e. wealth, banking, demographic and real estate specific variables, the following findings are made: 1) real house price growth and construction activity dynamics are most sensitive to changes in population and construction prices, whereas real GDP, in contrary to common empirical findings in other countries, turns out to have only a minor impact in the short-term, 2) exogenous house price shocks have no long-term impacts on housing supply and vice versa, and 3) despite the recent substantial price increases, worries of overvaluation are unfounded. Furthermore, based on a self-constructed quality index, evidence is provided for a positive impact of quality improvements in supplied dwellings on house prices.

The topic's relevance is related to the situation in the labor market, which needs competent realtors. The aim is to study and investigate the main factors of the psychological readiness towards realtor professional activity. The article considers the main approaches to studying the phenomenon of psychological readiness and factors of its functioning. Psychological readiness for real estate activity is an integrated quality of personality, which aims to an adequate reaction to the possibilities of a situational solution of universal professional problems of a realtor utilizing acquired professional competencies. The study involved 130 people. The methods employed in the present study include various types of questionnaires, namely Guilford's Test (J. Guilford); Big Five / 5PFQ (P. Costa & R. McCrae), Gertsberg Test (F. Hertsberh); Test Diagnostics of personality's socio-psychological attitudes in the motivational-needs sphere (O. F. Potomkin); Schwartz value survey (S. Schwartz); Professional activity motivation (K. Zamfir in A. Rean's modification); Diagnostics of motivational orientations in interpersonal communications (I. Ladanov, V. Urazaieva); Study of volitional self-regulation (A. Zvierkov, E. Eidman).The factors of psychological psychological readiness for professional activity as realtors were revealed: "standardness", "humanism", "pragmatism", "altruism", "endurance", "power", and "practicality". The main characteristics (competencies) of a specialist realtor include: a) the ability to solve complex problems and problems in the process of work (integral competence); b) the ability to apply knowledge in practical situations; ability to generate new ideas; ability to identify, formulate and solve problems; appreciate and respect diversity and multiculturalism; ability to act on the basis of ethical considerations (motives); ability to act socially responsibly and consciously; ability to develop and manage projects; ability to motivate people and move towards a common goal (general competencies); c) the ability to identify, analyze and interpret the information series of the realtor profession, identify problems and suggest ways to solve them; the ability to demonstrate an understanding of the patterns and features of human functioning in the context of the transaction in the context of professional tasks; ability to offer creative ways to solve professional problems, to make professionally correct decisions and to implement them (special competencies).

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2019
Cataloged from PDF version of thesis.
Includes bibliographical references (pages 28-29).
Real estate developers and investors have a vested interest in discovering new techniques for estimating the direction and magnitude of changes in residential rent within a neighborhood. This study hypothesizes, and finds evidence, that taxi activity is a proxy for changing income and neighborhood quality as well as an indicator of gentrification. Novel research is performed to determine if taxi activity is a significant predictor of rents in New York City at the neighborhood level. Nine OLS regression models are created using data about 1,466,234,991 taxi pickups and drop-offs, median rent, and median income across 188 neighborhoods in New York City in the years of 2010-2015. In all nine models, taxi activity is found to be a statistically significant predictor of rent at 99% confidence. This study finds that a I standard deviation positive shock in taxi drop-offs will result in a 0.009% 0.155% higher rent the next year on average.
by Philip Caporaso.
S.M. in Real Estate Development
S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

rea of real estate practice is extremely extensive and real-estate market as a whole conceals and connects many scientific disciplines that reflect and contribute to its functioning. Differentiating market and curiosity, whether existing legislation reflects the current need for real estate market in the Czech Republic, played an important role in choosing the theme of my final thesis. I performed an analysis of adjustments related to business in real estate activities. With a view to these facts has been made establishment, that the current legislation appears to be "totally inadequate". It does not define any criteria that would select those in participating in the property market in Czech Republic. The only solution to this absurd situation of trade law is an amendment or other legislation to ensure the entry of new players on the real estate market, provided proof of professional competence and moral integrity, or the introduction of compulsory licenses in real estate activity, which should lead to an overall improvement in the real estate market - not only commercially and ehically.

Economics
Ph.D.
This dissertation examines the role of asset prices to act as a transmission and amplification mechanism. Specifically, it looks at how changes in asset prices can help transmit and amplify technology shocks through the credit channel by changing the supply of loanable funds, or changing the supply of deposits, or both. Using a modified version of the Kiyotaki-Moore credit cycles model with concave utility and decreasing returns to scale production function, the dissertation illustrates that asset prices can as a credible amplification and transmission mechanism. Using concave utility and decreasing returns to scale production function allows the incorporation risk aversion into the credit cycles model. The model can help explain the gap between observed magnitude of shocks, and the corresponding changes in economic activity. The behavior of a heterogeneous agent economy in response to a technology shock is simulated using computer programs. The simulations show that a one percent technology shock translates into a more than four percent change in capital held by the constrained agents by moving capital from one agent type to the other. This moves the economy away from a first-best equilibrium. If the technology shock is positive there is an increased demand of capital from the more productive agents, and thus a more than proportionate increase in output. If the technology shock is negative, the opposite path is followed, and economic activity falls more than proportionately. There are credit constraints built into the model. Agents' access to credit is determined by the value of collateral on oer, which in turn depends on asset prices. Technology shocks change demand for assets, their prices, their value as collateral, and hence agents' access to credit. Further, since prices are forward looking, a shock in one period propagates through time. These simulations show that the effects of the shock can be felt up to 13 periods after it has hit. An event analysis with housing price data from 18 countries spanning a period of more than four decades is also performed. It shows that there is strong co-movement of housing prices and economic activity. In particular, larger changes in housing prices have been accompanied by qualitatively similar changes in economic activity. The period leading up to the peak of a real estate cycle is accompanied by a more than proportionate increase in private sector lending, and once the peak has been crested, there is a more than proportionate fall in nominal private sector lending. This evidence is in sync with the earlier observation that changes in asset prices influence agents' access to credit and contribute to the persistence of the effects of the shock far into the future. Further, the preferred measure of economic health, the rate of inflation, sees no measurable change in periods leading up to a real estate peak, and beyond. This throws up the need for some other measure of economic health that is better able to capture the events in asset markets. Policy makers have been paying more attention to this channel in the aftermath of the sub-prime mortgage crisis in the United States. There have been multiples changes in regulatory policy across the world, and specific steps are being taken to dampen exuberance in the real estate market. Only time can tell if these measures turn out to be effective, but at least a step has been taken towards realizing that housing market can lead to a wider economic and banking crisis.
Temple University--Theses

The main motive of this work is that real estate agents and professionals engaged in real estate activities are negatively perceived by society. We assume that the professional misconduct of estate agencies, often mentioned in the media, is due to a lack of professional expertise. Therefore, we deal with the issue of education level of skilled workers at the real estate market in the Czech Republic. In a sample of 72 respondents, we try to find the level of professional expertise. This thesis notes and compares legislative standards and criteria for the performance of real estate activity in the CR and abroad. Further maps initiatives to improve the expertise and efforts to change legislation that would generally lead to a controlled expertise increase of the real estate segment at the market. It touches, examines and attempts to define the basic columns of expertise required for qualified performance of real estate activities

Thesis (M.S.)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, 1986.
MICROFICHE COPY AVAILABLE IN ARCHIVES AND ROTCH.
Includes bibliographical references.
by John Charles Wolter.
M.S.

The thesis maps the decision-making practice of courts in real estate cases and related areas. Judicial decisions are organized in logical parts and there was an effort to provide an overall and comprehensive overview of the opinions held by courts on the individual legal questions arising in real estate cases and thus define the most frequent causes of the disputes and their subject-matters. Explicated in the light of the decisions rendered by the Supreme Court of the Czech Republic and the Supreme Administrative Court of the Czech Republic, or even the findings of the Constitutional Court of the Czech Republic, are judiciary’s attitudes to the basic principles of real estate agency and real estate activity in general, as well as to relating legal questions, with special regard to the contracts usually entered into in real estate practice, primarily agency contracts and mediated contracts. So far, case-law of this kind has not been comprehensively studied, despite the fact that there still are uncertainties regarding both the real estate legislation and the approach to resolution of real estate cases, as well as ensuing typical contractual obligational relations between parties on the real estate market. This is also the reason why this particular topic was chosen for the thesis. Based on the coverage and a thorough analysis of the judicial decisions at issue a conclusion is made that decision-making practice has already stabilized in some real estate areas and these decisions are used as basis in future cases. Nevertheless, there still are some legal questions which have not yet been tackled by courts or conflicting judicial decisions, which may even be rendered in the most essential and fundamental issues of real estate activity. This is partly due to the fact that the real estate market is still a relatively young business field and partly due to missing or inadequate legislation which is to provide for real estate activity, including real estate agency.

Le choix de l’immeuble au sein duquel s’exercera l’activité économique conditionne son attractivité, laquelle est déterminante pour la réussite du projet entrepreneurial du commerçant. Au-delà des critères inhérents à l’emplacement et aux caractéristiques physiques du local, le commerçant doit être suffisamment avisé quant au statut applicable à l’entier immeuble. Ce dernier, dès lors qu’il se trouve régi par le statut de la copropriété, va directement impacter les prérogatives de l’exploitant. En ce sens, l’exercice d’une activité commerciale en copropriété immobilière souffre, d’une part, de restrictions issues des documents contractuels inhérents à l’immeuble. Ces obstacles à l’exercice d’une activité commerciale au sein de l’immeuble collectif, bien qu’apparents, n’en sont pas moins complexes. L’exploitation commerciale rencontre, d’autre part, des obstacles issus d’exigences légales, règlementaires, mais également prétoriennes, dont la prévisibilité se révèle difficile, voire impossible, en raison de leur diversité. Partant, malgré la valeur constitutionnelle octroyée à la liberté du commerce et de l’industrie, ce principe n’en est pas moins restreint dès lors que le siège de l’activité se situe au sein d’un immeuble soumis au statut de la copropriété. Les difficultés rencontrées par l’exploitant démontrent la nécessité d’engager une démarche globale, de mener une réflexion juridique désectorisée pour aboutir à un équilibre entre plusieurs domaines impératifs du droit. La maîtrise des différentes branches du droit applicable à l’immeuble s’avère dès lors fondamentale dans le cadre d’un processus d’unité et d’harmonisation
The choice of the building in which the economic activity will take place shapes its attractiveness, which is essential for the merchant’s entrepreneurial project success. Beyond the inherent criteria associated to the location and to the premises’ physical features, the merchant must be enough provided with information on the status which is applicable to the entire building. From the moment it is governed by the co-ownership status, the latter will directly affect the merchant’s right. That is to say, on the one hand, the practice of a commercial activity within a building co-ownership suffers from restrictions coming from the contractual documents which are linked to the building. These barriers which stop the merchant to properly practice his activity within the collective building, although obvious, are quite sensitive. Moreover, commercial exploitation meets obstacles arising from legal, regulatory, but also praetorian requirements, some happenings which are quite impossible to anticipate because of their diversity. Thus, despite the constitutional value granted to the freedom of trade and industry, this principle is restricted since the head office of the activity is located in a building which is subject to the co-ownership status. The difficulties that the merchant meets demonstrate the need to take a global approach and to lead a legal reflection so that a balance between several priorities areas of law can be reached. The mastery of the different branches of the law which are applicable to the building is therefore a fundamental need in the context of unity process and harmonization

The real estate industry is facing a major change. The activity based working is promoted heavily by real estate companies, brokers and consultants as the future workplace. Knowledge and information is however limited. Many concepts have a tendency to get mixed up when companies on the market choose to formulate their own concepts. The research is neglected, and more focused on health and design. This thesis focuses on describing how the market may evolve the knowledge and how to implement the activity based working in the workplaces. Purpose The thesis aims to conduct a study to clarify the question of what activity based working means. The focus will be to examining the current work that is proceeding on the market but also explore if it would be possible to facilitate the implementation of the activity based working by using explorative factor analysis. Primary questions • How to define activity based working? • Which theories support the discussion and definition of activity based working? • Which concepts are available on the market today and how are these promoted? • Can the implementation of the activity based working be facilitated by using an activity based scale that measures needs and reactions in different workplace environments? Method The thesis consists of both a qualitative and a quantitative study. The qualitative study is based on interviews and a survey of how the market perceive the activity based working and with which keywords associated with the concept. In total, seven interviews were conducted. The quantitative survey consised of approximately 1000 surveys. Conclusions • Importance of a common definition and market approach for activity based working • Manage the self interest in the market to ensure a good development of activity based working • Activity based working is not just about design and floorlayouts. • Knowledge sharing should be prioritized • Organization, Technology and Premises are all very influencing aspects • The implementation requires a lot of time and effort • Through exploratory factor analysis, is it possible to define the driving forxes within the organization. • The workplace is no longer a specific place. It is an activity that can be performed in multiple places. Future research Future research should focus to continuing efforts on create an overall overview of the activity based working, but also develop clear and efficient processes for the implementation of the activity based working. Other interesting aspects are the international dimension of the work. The development with activity based working will in the future not only be applied on offices. To therefore explore how various industries work with the concepts and if there are any specific needs to develop in the future. Definition In the analysis chapter the author presents a comprehensive definition of activity based working which is developed with the support by the qualitative and quantitative research: “Based on the activities that occur in the workplace, teadership, facilities, and technology are customized to effectively and in a structured way maximize the benefits and value of the work that the individuals performs”
Fastighetsbranschen står inför en förändring. Det aktivitetsbaserade arbetssättet marknadsförs starkt av fastighetsbolag, mäklare och konsulter som det framtida arbetssättet. Kunskapen och informationen är dock bristfällig. Många begrepp har en tendens att blandas ihop då aktörer väljer att formulera sina egna begrepp. Forskningen är eftersatt och mer fokuserad på hälsa och design. Detta examensarbete fokuserar därför på att redogöra för hur arbetssättet kan utvecklas och hur arbetet i framtiden skall på ett effektivt sätt implementera det aktivitetsbaserade arbetssättet inom svenska företag och organisationer. Syfte Syftet med examensarbetet är att bringa klarhet i frågan om vad ett aktivitetsbaserat arbetssätt är. Fokus kommer även ligga i att undersöka det pågående arbetet på marknaden och olika aktörers syn på arbetssättet. I arbetet undersöks även om det skulle vara möjligt att underlätta implementeringen av ett aktivitetsbaserat arbetsätt med hjälp av en aktivitetsbaserad skala som mäter reaktioner på olika arbetsmiljöer. Frågeställningar • Hur definieras aktivitetsbaserat arbetsätt? • Vilka teorier stödjer diskussionen och definitionen av aktivitetsbaserat arbetssätt? • Vilka koncept finns idag på marknaden inom aktivitetsbaserat arbetsätt och hur preciseras och presenteras dessa? • Kan implementeringen av ett aktivitetsbaserat arbetsätt underlättas med hjälp av en aktivitetsbaserad skala som mäter behov och reaktioner på arbetsplatsmiljöer? Metod Undersökningen består dels av en kvalitativ samt en kvantitativ del. Den kvalitativa delen baseras på intervjuer och en marknadsundersökning över hur aktörer på marknaden uppfattar det aktivitetsbaserade begreppet och vilka nyckelord som används frekvent. Sammanlagt har sju även intervjuer genomförts med framstående personer inom ämnesområdet. Den kvantitativa undersökningen består av ett 100-tal enkäter som undersökt kunskapen om det aktivitetsbaserade begreppet inom marknaden och även här vilka nyckelord som används frekvent. Slutsatser • Samtliga aktörer bör enas om gemensam definition, information och kommunikation av det aktivitetsbaserade arbetssättet • Hantera marknadens starka egenintresse av arbetssättets utvekcling för att säkerställa en en seriös och förtreoendegivande bild av det aktivitetsbaserade arbetssätt • Aktivitetsbaserat arbetssätt har många fler dimensioner än design och planlösningar • Kunskapsspridning inom ämnesområdet bör prioriteras och säkerställas • Organisation, Ledarskap, Medarbetare, Teknik och Lokal är samtliga aspekter som bör beaktas vid implementeringen av det aktivitetsbaserade arbetssättet • Aktivitetsbaserat arbetssätt är en förändringsprocess som kräver kraft, engagemang och tid • Genom explorativ faktoranalys kan tydliga drivande aspekter urskiljas inom organisationer (AktivitetsBaserad Skala) • Arbetsplatsen är inte längre en specifik plats utan en aktivitet som kan utföras på mängder av platser. Framtida forskning Den framtida forskningen bör fokuseras på att dels fortsätta arbetet med att skapa en helhetsbild av arbetssättet men även möjliggöra tydliga och effektiva processer för implementering av det aktivitetsbaserade arbetssättet. Det internationella perspektivet är idag mindre utforskat. Ytterliggare ett område som är av intresse är hur olika branscher ser på utveckling av arbetssättet och vilka specifika behov dessa branscher möjligen har. Definition I det avslutande kapitlet redogörs en samlad definition av aktivitetsbaserat arbetsssätt som är framtagen med stöd av den kvalitativa och kvantitativa forskningen: “ Utifrån de aktiviteter som sker på arbetsplatsen anpassas ledarskap, lokaler och teknik för att på ett effektivt och strukturerat sätt maximera nyttan och värdet i det arbete som individerna utför”

Diploma thesis deals with methods of valuation of properties in the Slovak Republic focusing on the family house. In thesis is also described a detailed questionnaire, which is dedicated to the real estate slovak market research . Diploma thesis describes analysis of the the most common valuation methods used in Slovakia. In thesis is indicated valuation of family house situated in Žilina region using 3 methods.

The aim of this diploma thesis is to analyse development in arranging of the real estate transactions in the Czech Republic after 1989 and describe contemporary condition. Contemporary condition was analysed as unsatisfactory. There does not exist any law that would regulate real estate market, neither is there a duty to proof a professional training or ability for the business. Real estate agencies do not have a good reputation in the Czech Republic and with many citizens they are unfavourable. As a reaction upon contemporary unsatisfactory situation, the Economic Bureau of the Czech Chamber of Deputies elected an operative group that is supposed to maintain a survey of the contemporary situation in the real estate market and suggest possible solutions. This work aims also to analyse the suggested solutions and to supply solutions that would be missing.

AbstractResidential segregation is both a cause and consequence of socioeconomic inequalities. Since the 1990s, segregation patterns in Latin American cities have changed significantly. This is related to major urban transformations caused by privatization policies related to urban development, commercialization, and real estate activity. The main purpose of this chapter is to study residential socioeconomic segregation in the city of Bogotá, Colombia in 2005, using educational attainment as an indicator of socioeconomic status while considering the drivers of segregation during the 1990s. We also introduce a brief analysis of the relationship between residential segregation and inequality based on a model that allows replicating the income distribution of the population using census variables. This chapter shows that residential segregation in Bogotá is related to per capita income inequality, however, segregation may be caused by the dynamics of land and housing markets rather than inequality.

AbstractIn this paper, we present a multimodal deep model for detection of abnormal activity, based on bidirectional Long Short-Term Memory neural networks (LSTM). The proposed model exploits three different input modalities: RGB imagery, thermographic imagery and Channel State Information from Wi-Fi signal reflectance to estimate human intrusion and suspicious activity. The fused multimodal information is used as input in a Bidirectional LSTM, which has the benefit of being able to capture temporal interdependencies in both past and future time instances, a significant aspect in the discussed unusual activity detection scenario. We also present a Bayesian optimization framework that fine-tunes the Bidirectional LSTM parameters in an optimal manner. The proposed framework is evaluated on real-world data from a critical water infrastructure protection and monitoring scenario and the results indicate a superior performance compared to other unimodal and multimodal approaches and classification models.

This chapter focuses on the period leading up to the publication of Leaves of Grass in 1855, revealing how Whitman financed his poetic output by successfully negotiating the unstable Brooklyn real estate market. He bought and sold several properties, moving from house to house as he went along. In the years up to 1855, Whitman forged an adaptable marketplace persona, deploying it repeatedly while composing receipts, contracts, and house-plans. Whitman’s worldly experiences of moneymaking inform his narratives of transcendence and organic wholeness. In the attempt to transcend the particularities of his urban activity, he ends up building his poetic vision out of the rhythms and inflections of the real estate market. This has significant implications for the way we read his later works: for the rest of his career, Whitman concentrated on tearing down, annexing, and building over again his subsequent poetic projects.

Macroeconomic summary Several factors contributed to an increase in projected inflation on the forecast horizon, keeping it above the target rate. These included inflation in December that surpassed expectations (5.62%), indexation to higher inflation rates for various baskets in the consumer price index (CPI), a significant real increase in the legal minimum wage, persistent external and domestic inflationary supply shocks, and heightened exchange rate pressures. The CPI for foods was affected by the persistence of external and domestic supply shocks and was the most significant contributor to unexpectedly high inflation in the fourth quarter. Price adjustments for fuels and certain utilities can explain the acceleration in inflation for regulated items, which was more significant than anticipated. Prices in the CPI for goods excluding food and regulated items also rose more than expected. This was partly due to a smaller effect on prices from the national government’s VAT-free day than anticipated by the technical staff and more persistent external pressures, including via peso depreciation. By contrast, the CPI for services excluding food and regulated items accelerated less than expected, partly reflecting strong competition in the communications sector. This was the only major CPI basket for which prices increased below the target inflation rate. The technical staff revised its inflation forecast upward in response to certain external shocks (prices, costs, and depreciation) and domestic shocks (e.g., on meat products) that were stronger and more persistent than anticipated in the previous report. Observed inflation and a real increase in the legal minimum wage also exceeded expectations, which would boost inflation by affecting price indexation, labor costs, and inflation expectations. The technical staff now expects year-end headline inflation of 4.3% in 2022 and 3.4% in 2023; core inflation is projected to be 4.5% and 3.6%, respectively. These forecasts consider the lapse of certain price relief measures associated with the COVID-19 health emergency, which would contribute to temporarily keeping inflation above the target on the forecast horizon. It is important to note that these estimates continue to contain a significant degree of uncertainty, mainly related to the development of external and domestic supply shocks and their ultimate effects on prices. Other contributing factors include high price volatility and measurement uncertainty related to the extension of Colombia’s health emergency and tax relief measures (such as the VAT-free days) associated with the Social Investment Law (Ley de Inversión Social). The as-yet uncertain magnitude of the effects of a recent real increase in the legal minimum wage (that was high by historical standards) and high observed and expected inflation, are additional factors weighing on the overall uncertainty of the estimates in this report. The size of excess productive capacity remaining in the economy and the degree to which it is closing are also uncertain, as the evolution of the pandemic continues to represent a significant forecast risk. margin, could be less dynamic than expected. And the normalization of monetary policy in the United States could come more quickly than projected in this report, which could negatively affect international financing costs. Finally, there remains a significant degree of uncertainty related to the duration of supply chocks and the degree to which macroeconomic and political conditions could negatively affect the recovery in investment. The technical staff revised its GDP growth projection for 2022 from 4.7% to 4.3% (Graph 1.3). This revision accounts for the likelihood that a larger portion of the recent positive dynamic in private consumption would be transitory than previously expected. This estimate also contemplates less dynamic investment behavior than forecast in the previous report amid less favorable financial conditions and a highly uncertain investment environment. Third-quarter GDP growth (12.9%), which was similar to projections from the October report, and the fourth-quarter growth forecast (8.7%) reflect a positive consumption trend, which has been revised upward. This dynamic has been driven by both public and private spending. Investment growth, meanwhile, has been weaker than forecast. Available fourth-quarter data suggest that consumption spending for the period would have exceeded estimates from October, thanks to three consecutive months that included VAT-free days, a relatively low COVID-19 caseload, and mobility indicators similar to their pre-pandemic levels. By contrast, the most recently available figures on new housing developments and machinery and equipment imports suggest that investment, while continuing to rise, is growing at a slower rate than anticipated in the previous report. The trade deficit is expected to have widened, as imports would have grown at a high level and outpaced exports. Given the above, the technical staff now expects fourth-quarter economic growth of 8.7%, with overall growth for 2021 of 9.9%. Several factors should continue to contribute to output recovery in 2022, though some of these may be less significant than previously forecast. International financial conditions are expected to be less favorable, though external demand should continue to recover and terms of trade continue to increase amid higher projected oil prices. Lower unemployment rates and subsequent positive effects on household income, despite increased inflation, would also boost output recovery, as would progress in the national vaccination campaign. The technical staff expects that the conditions that have favored recent high levels of consumption would be, in large part, transitory. Consumption spending is expected to grow at a slower rate in 2022. Gross fixed capital formation (GFCF) would continue to recover, approaching its pre-pandemic level, though at a slower rate than anticipated in the previous report. This would be due to lower observed GFCF levels and the potential impact of political and fiscal uncertainty. Meanwhile, the policy interest rate would be less expansionary as the process of monetary policy normalization continues. Given the above, growth in 2022 is forecast to decelerate to 4.3% (previously 4.7%). In 2023, that figure (3.1%) is projected to converge to levels closer to the potential growth rate. In this case, excess productive capacity would be expected to tighten at a similar rate as projected in the previous report. The trade deficit would tighten more than previously projected on the forecast horizon, due to expectations of an improved export dynamic and moderation in imports. The growth forecast for 2022 considers a low basis of comparison from the first half of 2021. However, there remain significant downside risks to this forecast. The current projection does not, for example, account for any additional effects on economic activity resulting from further waves of COVID-19. High private consumption levels, which have already surpassed pre-pandemic levels by a large margin, could be less dynamic than expected. And the normalization of monetary policy in the United States could come more quickly than projected in this report, which could negatively affect international financing costs. Finally, there remains a significant degree of uncertainty related to the duration of supply chocks and the degree to which macroeconomic and political conditions could negatively affect the recovery in investment. External demand for Colombian goods and services should continue to recover amid significant global inflation pressures, high oil prices, and less favorable international financial conditions than those estimated in October. Economic activity among Colombia’s major trade partners recovered in 2021 amid countries reopening and ample international liquidity. However, that growth has been somewhat restricted by global supply chain disruptions and new outbreaks of COVID-19. The technical staff has revised its growth forecast for Colombia’s main trade partners from 6.3% to 6.9% for 2021, and from 3.4% to 3.3% for 2022; trade partner economies are expected to grow 2.6% in 2023. Colombia’s annual terms of trade increased in 2021, largely on higher oil, coffee, and coal prices. This improvement came despite increased prices for goods and services imports. The expected oil price trajectory has been revised upward, partly to supply restrictions and lagging investment in the sector that would offset reduced growth forecasts in some major economies. Elevated freight and raw materials costs and supply chain disruptions continue to affect global goods production, and have led to increases in global prices. Coupled with the recovery in global demand, this has put upward pressure on external inflation. Several emerging market economies have continued to normalize monetary policy in this context. Meanwhile, in the United States, the Federal Reserve has anticipated an end to its asset buying program. U.S. inflation in December (7.0%) was again surprisingly high and market average inflation forecasts for 2022 have increased. The Fed is expected to increase its policy rate during the first quarter of 2022, with quarterly increases anticipated over the rest of the year. For its part, Colombia’s sovereign risk premium has increased and is forecast to remain on a higher path, to levels above the 15-year-average, on the forecast horizon. This would be partly due to the effects of a less expansionary monetary policy in the United States and the accumulation of macroeconomic imbalances in Colombia. Given the above, international financial conditions are projected to be less favorable than anticipated in the October report. The increase in Colombia’s external financing costs could be more significant if upward pressures on inflation in the United States persist and monetary policy is normalized more quickly than contemplated in this report. As detailed in Section 2.3, uncertainty surrounding international financial conditions continues to be unusually high. Along with other considerations, recent concerns over the potential effects of new COVID-19 variants, the persistence of global supply chain disruptions, energy crises in certain countries, growing geopolitical tensions, and a more significant deceleration in China are all factors underlying this uncertainty. The changing macroeconomic environment toward greater inflation and unanchoring risks on inflation expectations imply a reduction in the space available for monetary policy stimulus. Recovery in domestic demand and a reduction in excess productive capacity have come in line with the technical staff’s expectations from the October report. Some upside risks to inflation have materialized, while medium-term inflation expectations have increased and are above the 3% target. Monetary policy remains expansionary. Significant global inflationary pressures and the unexpected increase in the CPI in December point to more persistent effects from recent supply shocks. Core inflation is trending upward, but remains below the 3% target. Headline and core inflation projections have increased on the forecast horizon and are above the target rate through the end of 2023. Meanwhile, the expected dynamism of domestic demand would be in line with low levels of excess productive capacity. An accumulation of macroeconomic imbalances in Colombia and the increased likelihood of a faster normalization of monetary policy in the United States would put upward pressure on sovereign risk perceptions in a more persistent manner, with implications for the exchange rate and the natural rate of interest. Persistent disruptions to international supply chains, a high real increase in the legal minimum wage, and the indexation of various baskets in the CPI to higher inflation rates could affect price expectations and push inflation above the target more persistently. These factors suggest that the space to maintain monetary stimulus has continued to diminish, though monetary policy remains expansionary. 1.2 Monetary policy decision Banco de la República’s board of directors (BDBR) in its meetings in December 2021 and January 2022 voted to continue normalizing monetary policy. The BDBR voted by a majority in these two meetings to increase the benchmark interest rate by 50 and 100 basis points, respectively, bringing the policy rate to 4.0%.