Volume Offered and Wood Prices: A Causality Test for National Forests

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Abstract:

The object of this study was to determine if the volume offered on National Forests influenced, or was influenced by, the price of timber and lumber. The tests used Granger's definition of causality, according to which volume offered influences prices if prices can be predicted more accurately using information on volume offered than without it. The testing procedure allowed for the measurement of causality of volume offered to price, price to volume offered, and instantaneous feedback. The tests were based on quarterly data from 1960-I to 1982-IV, relating to volume offered on all National Forests of U.S. Forest Service Region 6, the price paid for that timber, and the price of Douglas-fir lumber. All results were negative. There was no strong evidence that, once past data on price were accounted for, knowledge of past, current, and future volume offered helped in predicting current prices. Symmetrically, volume offered did not appear to have been influenced by wood prices during the sample period. Despite some limitations of the method the results indicate that it is at best very difficult to predict the effect of changes in National Forest timber offerings on wood prices. Forest Sci. 31:405-414.

Keywords: Granger causality; Timber supply; econometrics; timber and lumber prices

Document Type: Journal Article

Affiliations: Assistant Professor, School of Business Administration, University of Wisconsin, Milwaukee

Publication date: June 1, 1985

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