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The Dynamic Behavior of Efficient Timber Prices.

A simple theoretical model of a timber market finds that there exists a rational expectations equilibrium in which prices evolve according to a stationary AR (1) process. Simulations analyze a model with a more general representation of timber stock dynamics. Implications for the optimal harvesting...

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Published in:Land Economics Vol. 80; no. 1; pp. 95 - 109
Main Authors: McGough, Bruce, Plantinga, Andrew J., Provencher, Bill
Format: Article
Published: University of Wisconsin Press February 2004
Subjects:
Prices > Mathematical models
Timber
Prices
Online Access:View this record in EBSCOhost
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      aug:
        au:
          McGough, Bruce
          Plantinga, Andrew J.
          Provencher, Bill
      su:
        Prices -- Mathematical models
        Timber
        Prices
      sug:
        subj:
          Prices -- Mathematical models
          Timber
          Prices
      ab: A simple theoretical model of a timber market finds that there exists a rational expectations equilibrium in which prices evolve according to a stationary AR (1) process. Simulations analyze a model with a more general representation of timber stock dynamics. Implications for the optimal harvesting literature are: 1) market efficiency provides little justification for random walk prices; 2) unit root tests, used in previous studies to analyze the informational efficiency of timber markets, do not distinguish between efficient and inefficient markets; and 3) failure to recognize asymmetric disturbances in time-series analyses of historical timber prices can lead to sub-optimal harvesting rules. (JEL Q23) Reprinted by permission of the publisher.
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      doctype: Article
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    language: English
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