Incorporating Data and Theory in Roundwood Supply and Demand Estimation

Lauri Hetemäki and Kuuluvainen Jari

American Journal of Agricultural Economics, 1992, vol. 74, issue 4, 1010-1018

Abstract: This paper examines the aggregate pulpwood market in Finland using the econometric approach advocated by Hendry, Neale, and Joba and Spanos, who propose a statistically consistent way to estimate simultaneous-equations models. Private nonindustrial timber supply is estimated along with a three-input demand function (capital, labor, and wood). Results indicate that short-term supply reacts positively to an increase in stumpage price, while the long-term (total) elasticity is negative and small in absolute terms. Capital is a complement while labor is a substitute for roundwood input. Dynamic adjustment process, substitution and cross-price effects, and capital market imperfections implied by the present study differ from those obtained in previous research.

Date: 1992
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