Price integration for domestic and imported sawlogs and pulpwood in Finland: an update

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper provides an analysis on the integration of prices for imported coniferous pulpwood and sawlogs, and respective domestic stumpage prices in the Finnish wood market. Eight real price series were investigated during 2002-2014 using monthly observations. The bounds testing approach by Pesaran et al. [(2001) Bounds testing approaches to the analysis of level relationships. J Appl Econom. 16: 289-326. doi:10.1002/jae.616], indicates there are long-run relationships between prices of domestic and imported wood. For more detailed information, the vector error correction model (VECM) approach was used. Estimation of a system with all eight prices with interpretable results did not succeed; therefore, we estimated models for prices of sawlogs and for pulpwood separately. For sawlogs, two co-integrating vectors, one for pine and one for spruce, were found. For pulpwood prices, one co-integrating vector was identified. The estimated VECMs confirm the results of bounds testing approach, suggesting that causation in the Finnish wood market runs from domestic prices to prices of imported wood. We conclude that prices of domestic and imported coniferous logs and pulpwood are closely connected. The question of full integration remains open, as border prices and stumpage prices by definition differ, at least, by logging and transportation costs.
Original languageEnglish
JournalScandinavian Journal of Forest Research
Volume33
Issue number1
Pages (from-to)71-80
Number of pages10
ISSN0282-7581
DOIs
Publication statusPublished - 2018
MoE publication typeA1 Journal article-refereed

Fields of Science

  • 4112 Forestry
  • Wood prices
  • cointegration
  • import
  • export
  • customs
  • bounds testing
  • TIME-SERIES
  • UNIT-ROOT
  • TIMBER MARKET
  • COINTEGRATION
  • DYNAMICS
  • LAW
  • ESTIMATOR
  • CHINA
  • TESTS

Cite this

@article{d30a892e8a464d16b9925130e8ce98f9,
title = "Price integration for domestic and imported sawlogs and pulpwood in Finland: an update",
abstract = "This paper provides an analysis on the integration of prices for imported coniferous pulpwood and sawlogs, and respective domestic stumpage prices in the Finnish wood market. Eight real price series were investigated during 2002-2014 using monthly observations. The bounds testing approach by Pesaran et al. [(2001) Bounds testing approaches to the analysis of level relationships. J Appl Econom. 16: 289-326. doi:10.1002/jae.616], indicates there are long-run relationships between prices of domestic and imported wood. For more detailed information, the vector error correction model (VECM) approach was used. Estimation of a system with all eight prices with interpretable results did not succeed; therefore, we estimated models for prices of sawlogs and for pulpwood separately. For sawlogs, two co-integrating vectors, one for pine and one for spruce, were found. For pulpwood prices, one co-integrating vector was identified. The estimated VECMs confirm the results of bounds testing approach, suggesting that causation in the Finnish wood market runs from domestic prices to prices of imported wood. We conclude that prices of domestic and imported coniferous logs and pulpwood are closely connected. The question of full integration remains open, as border prices and stumpage prices by definition differ, at least, by logging and transportation costs.",
keywords = "4112 Forestry, Wood prices, cointegration, import, export, customs, bounds testing, TIME-SERIES, UNIT-ROOT, TIMBER MARKET, COINTEGRATION, DYNAMICS, LAW, ESTIMATOR, CHINA, TESTS",
author = "Jari Kuuluvainen and Jaana Korhonen and Danuyn Xu and Anne Toppinen",
year = "2018",
doi = "10.1080/02827581.2017.1327614",
language = "English",
volume = "33",
pages = "71--80",
journal = "Scandinavian Journal of Forest Research",
issn = "0282-7581",
publisher = "TAYLOR & FRANCIS LTD",
number = "1",

}

Price integration for domestic and imported sawlogs and pulpwood in Finland: an update. / Kuuluvainen, Jari ; Korhonen, Jaana ; Xu, Danuyn; Toppinen, Anne .

In: Scandinavian Journal of Forest Research, Vol. 33, No. 1, 2018, p. 71-80.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Price integration for domestic and imported sawlogs and pulpwood in Finland: an update

AU - Kuuluvainen, Jari

AU - Korhonen, Jaana

AU - Xu, Danuyn

AU - Toppinen, Anne

PY - 2018

Y1 - 2018

N2 - This paper provides an analysis on the integration of prices for imported coniferous pulpwood and sawlogs, and respective domestic stumpage prices in the Finnish wood market. Eight real price series were investigated during 2002-2014 using monthly observations. The bounds testing approach by Pesaran et al. [(2001) Bounds testing approaches to the analysis of level relationships. J Appl Econom. 16: 289-326. doi:10.1002/jae.616], indicates there are long-run relationships between prices of domestic and imported wood. For more detailed information, the vector error correction model (VECM) approach was used. Estimation of a system with all eight prices with interpretable results did not succeed; therefore, we estimated models for prices of sawlogs and for pulpwood separately. For sawlogs, two co-integrating vectors, one for pine and one for spruce, were found. For pulpwood prices, one co-integrating vector was identified. The estimated VECMs confirm the results of bounds testing approach, suggesting that causation in the Finnish wood market runs from domestic prices to prices of imported wood. We conclude that prices of domestic and imported coniferous logs and pulpwood are closely connected. The question of full integration remains open, as border prices and stumpage prices by definition differ, at least, by logging and transportation costs.

AB - This paper provides an analysis on the integration of prices for imported coniferous pulpwood and sawlogs, and respective domestic stumpage prices in the Finnish wood market. Eight real price series were investigated during 2002-2014 using monthly observations. The bounds testing approach by Pesaran et al. [(2001) Bounds testing approaches to the analysis of level relationships. J Appl Econom. 16: 289-326. doi:10.1002/jae.616], indicates there are long-run relationships between prices of domestic and imported wood. For more detailed information, the vector error correction model (VECM) approach was used. Estimation of a system with all eight prices with interpretable results did not succeed; therefore, we estimated models for prices of sawlogs and for pulpwood separately. For sawlogs, two co-integrating vectors, one for pine and one for spruce, were found. For pulpwood prices, one co-integrating vector was identified. The estimated VECMs confirm the results of bounds testing approach, suggesting that causation in the Finnish wood market runs from domestic prices to prices of imported wood. We conclude that prices of domestic and imported coniferous logs and pulpwood are closely connected. The question of full integration remains open, as border prices and stumpage prices by definition differ, at least, by logging and transportation costs.

KW - 4112 Forestry

KW - Wood prices

KW - cointegration

KW - import

KW - export

KW - customs

KW - bounds testing

KW - TIME-SERIES

KW - UNIT-ROOT

KW - TIMBER MARKET

KW - COINTEGRATION

KW - DYNAMICS

KW - LAW

KW - ESTIMATOR

KW - CHINA

KW - TESTS

U2 - 10.1080/02827581.2017.1327614

DO - 10.1080/02827581.2017.1327614

M3 - Article

VL - 33

SP - 71

EP - 80

JO - Scandinavian Journal of Forest Research

JF - Scandinavian Journal of Forest Research

SN - 0282-7581

IS - 1

ER -