Timber Restrictions, Financial Crisis, and Price Transmission in North American Softwood Lumber Markets

Competition among the South, the West, and Canada as major softwood lumber production regions has been affected by timber resource endowments, public land policies, and the general economy. To assess spatial price linkages, a threshold vector error correction model is applied on softwood lumber prices from 1978 to 2011. Price transmission is found to be nonlinear and asymmetric. The South is more adaptive to price disequilibrium. Short-term price adjustments are more sophisticated over the period of 1991 to 1993 related to the federal timber restrictions than over the period of 2008 to 2009 related to the global financial crisis.