Short-term influences on Canadian wood pulp prices and exports: a vector autoregression analysis

Abstract

The short-run dynamic impacts of macroeconomic variables on the Canadian pulp industry are investigated using the vector autoregression approach. The results show that shocks in the G10 exchange rate and the U.S. pulp price significantly affect Canadian pulp prices but not Canadian pulp exports. Short-term contracts, changes in the domestic demand for pulp, and limitations on pulp processing capacities are thought to be responsible for the limited responsiveness of pulp exports. The results also suggest that the indirect effect of shocks in the macroeconomy are important in explaining the dynamics of Canadian pulp price and pulp exports.