Journal of Forest Economics > Vol 17 > Issue 1

U.S. softwood lumber demand and supply estimation using cointegration in dynamic equations

Nianfu Song, , songn@missouri.edu Sun Joseph Chang, , xp2610@lsu.edu Francisco X. Aguilar, , aguilarf@missouri.edu
 
Suggested Citation
Nianfu Song, Sun Joseph Chang and Francisco X. Aguilar (2011), "U.S. softwood lumber demand and supply estimation using cointegration in dynamic equations", Journal of Forest Economics: Vol. 17: No. 1, pp 19-33. http://dx.doi.org/10.1016/j.jfe.2010.07.002

Published: 0/1/2011
© 0 2011 Nianfu Song, Sun Joseph Chang, Francisco X. Aguilar
 
Subjects
 
Keywords
JEL Codes:Q11
U.S. softwood lumber marketNon-stationary time seriesCointegrationElasticities
 

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In this article:
Introduction
Literature review and theoretical framework
Empirical model
Data and model estimation
Results and discussion
Conclusions

Abstract

This research estimated dynamic supply and demand equations for the U.S. softwood lumber using two-stage least squares. Long-run and ECM equations were derived from the estimated coefficients. Empirical data included monthly observations from 1990 to late 2006. Stationarity of the residuals was explored using Augmented Dickey–Fuller statistics. Results suggest that demand and supply elasticities in both short and long-run are relatively small compared with past studies. The Canadian softwood lumber supply to the U.S. is more price elastic than the domestic softwood lumber supply. U.S. import tariffs have had limited impact on the amount of softwood lumber imported from Canada. Technological progress and end-of-year seasonal effects on softwood lumber demand and supply were significant over this period.

DOI:10.1016/j.jfe.2010.07.002