The long-run determinants of U.S. lumber imported from Canada revisited

This paper examines the effects of the lumber price, the housing starts, and the bilateral exchange rate on U.S. softwood lumber imports from Canada in a cointegration framework. To that end, the Phillips–Hansen fully-modified cointegration (FM-OLS) procedure is applied to monthly data for the period from January 1994 through June 2009. Results show that there exists the long-run equilibrium relationship between the U.S. lumber imports from Canada and the selected macroeconomic and market variables. We also find that the U.S. lumber price and housing starts are more important than the bilateral exchange rate in influencing U.S.–Canada softwood lumber trade.

► The dynamic effects of the main factors affecting U.S. lumber imports from Canada are re-examined. ► It is found the presence of the long-run equilibrium relationship among the selected variables. ► The lumber price and housing starts are also found to be key determinants of the U.S. lumber market.