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Identification of the Long-Run Determinants of U.S.-Canada Softwood Lumber Trade

Author

Listed:
  • Zara Liaqat
  • Xinya Wang

Abstract

This paper uses monthly data from 1994 to 2016 in order to analyze the time series properties of the determinants of Canadian softwood lumber exports to the United States. The key findings generally support the hypotheses of previous studies with the exception of the significance of bilateral exchange rate movements. Based on dynamic ordinary least square estimates and several robust cointegraton tests, the paper finds that the estimated coefficients of exchange rate, softwood lumber price ratio and the two softwood lumber trade agreements are highly sensitive to the lag order used in econometric models. On the other hand, the coefficient of housing starts index remains independent of the variation in number of lags included. In addition, we study the long-run response of Canadian exports of lumber to shocks in these determinants by generating impulse response functions.

Suggested Citation

  • Zara Liaqat & Xinya Wang, 2018. "Identification of the Long-Run Determinants of U.S.-Canada Softwood Lumber Trade," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(1), pages 1-12, January.
    • Handle: RePEc:ibn:ijefaa:v:10:y:2018:i:1:p:1-12
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    References listed on IDEAS

    as
    1. Bolkesjø, Torjus F. & Buongiorno, Joseph, 2006. "Short- and long-run exchange rate effects on forest product trade: Evidence from panel data," Journal of Forest Economics, Elsevier, vol. 11(4), pages 205-221, January.
    2. Nen-Jing Chen & Glenn C. W. Ames & A. Lawton Hammett, 1988. "Implications of a Tariff on Imported Canadian Softwood Lumber," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 36(1), pages 69-81, March.
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    More about this item

    Keywords

    softwood lumber; stationary time series; cointegration; exchange rate;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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