Dynamics of the U.S.-Canada Softwood Lumber Trade: Market and Welfare Effects of the 2006 Softwood Lumber Agreement

This article examines the effects of macroeconomic variables (i.e., housing starts, disposable income, and the exchange rate), market variables (i.e., lumber price and wage rate) and the 2006 Softwood Lumber Agreement (SLA06) on U.S. lumber imports from Canada. It also looks at the welfare consequences of the SLA06. Results suggest that macroeconomic variables are more important than lumber price in determining the bilateral trade in softwood lumber. It is also found that, although the SLA06 has a significant negative effect on lumber imports from Canada, the market and welfare impacts of the trade restriction are moderate.exchange rates, housing starts, softwood lumber trade, trade restrictions, U.S. import demand, Financial Economics, Industrial Organization, International Relations/Trade, Political Economy, Public Economics,

A Re-examination of Factors Affecting United States Softwood Lumber Imports from Canada

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.Exchange rate, housing starts, lumber imports, lumber price, Phillips-Hansen fully-modified cointegration technique, softwood lumber trade, International Relations/Trade, Resource /Energy Economics and Policy,

Price Dynamics in the North American Wheat Market

Perron's test, Johansen cointegration analysis, and a vector error-correction (VEC) model are used to identify structural change, as well as to examine price dynamics in the U.S. and Canadian hard red spring (HRS) and durum wheat markets. It is found that, due to the U.S. Export Enhancement Program (EEP), price instability experienced in June 1986 has resulted in structural changes for Canadian HRS and durum prices. We also find that Canadian prices have significant effects on the determination of the U.S. prices in the North American wheat market.Canadian wheat exports, durum wheat, hard red spring wheat, Johansen cointe-gration test, unit root test with a structural break, vector error-correction, Demand and Price Analysis, International Relations/Trade,

Analyzing Factors Affecting U.S. Food Price Inflation.

Since the summer of 2007, U.S. food price has increased dramatically. Given public anxiety over fast-rising food prices in recent years, this paper attempts to analyze the effects of market factors ─ prices of energy and agricultural commodities and exchange rate ─ on U.S. food prices using a co-integration analysis. Results show that the agricultural commodity price and exchange rate play key roles in determining the short- and long-run movement of U.S. food prices. It is also found that in recent years, the energy price has been a significant factor affecting U.S. food prices in the long-run, but has little effect in the short-run. This implies the strong long-run linkage between energy and agricultural markets has emerged through production of commodity-based ethanol in the recent years.Agricultural commodity price, Energy price, Exchange rate, Food price inflation, Time-series analysis, Agribusiness,

A Dynamic Approach to the FDI-Environment Nexus: The Case of China and India

The cointegration analysis and a vector error-correction (VEC) model are applied to examine the short- and long-run relationships among foreign direct investment (FDI), economic growth, and the environment in China and India. The results show that FDI inflow plays a pivotal role in determining the short- and long-run movement of economic growth through capital accumulation and technical spillovers in the two countries. However, FDI inflow in both countries is found to have a detrimental effect on environmental quality in both the short- and long-run, supporting pollution haven hypothesis. Finally, it is found that, in the short-run, there exists a unidirectional causality from FDI inflow to economic growth and the environment in China and India - a change in FDI inflow causes a consequence change in environmental quality and economic growth, but the reverse does not hold.China, cointegration analysis, environment, FDI, India, vector error-correction, Research Methods/ Statistical Methods,

DYNAMICS IN THE MACROECONOMY AND THE U.S. AGRICULTURAL TRADE BALANCE

The effects of the exchange rate and the income and money supply of the United States and its major trading partners on the U.S. agricultural trade balance are examined using an autoregressive distributed lag (ARDL) model. Results suggest that the exchange rate is the key determinant of the short- and long-run behavior of the trade balance. It is also found that the income and money supply in both the United States and the trading partners have significant impacts on the U.S. agricultural trade in both the short- and long-run.Agricultural trade balance, autoregressive distributed lag model, exchange rate, income, macroeconomy, money supply, Agricultural and Food Policy,

The Environmental Consequences of Economic Growth Revisited

Although numerous studies on the economic growth-environment nexus exist, relatively little attention has been paid to model the effect of income on the environment, controlling for other relevant factors. The primary contribution of this paper is to examine the environmental consequences of economic growth for developed and developing countries in a dynamic cointegration framework by incorporating energy consumption and foreign direct investment (FDI). For this purpose, an autoregressive distributed lag (ARDL) approach to cointegration is applied to annual data for the period 1971-2005. Results show that economic growth improves environmental quality for developed countries in the long-run, but worsen the environment in developing economies. We also find that energy consumption has a detrimental long-run effect on environmental quality for both developed and developing countries. FDI, however, is found to have little long-run effect on the environment in both developed and developing countries. Finally, it is found that, in the short-run, income and energy play key roles in affecting the environment in developed and developing countries, but FDI does not.

Price Dynamics in the North American Wheat Market

This study examines price dynamics in the U.S. and Canadian hard red spring (HRS) and durum wheat markets. Using monthly prices for 1979-2002, we adopt Johansen cointegration tests and a vector error-correction (VEC) model. The results show that U.S. hard red winter (HRW) and Canadian HRS are exogenous in the model consisting of U.S. HRW and HRS and Canadian HRS prices. Canadian durum is exogenous in the model of U.S. and Canadian durum prices. Therefore, the results suggest that the HRW exporting industry and Canada have been the price leader in North American wheat markets.Canadian wheat exports, durum wheat, hard red spring wheat, Johansen cointegration test, unit root test with a structural break, vector error-correction, Demand and Price Analysis,

On the Dynamic Relationship between U.S. Farm Income and Macroeconomic Variables

This study examines the short- and long-run effects of changes in macroeconomic variables—agricultural commodity prices, interest rates and exchange rates—on the U.S. farm income. For this purpose, we adopt an autoregressive distributed lag (ARDL) approach to cointegration with quarterly data for 1989–2008. Results show that the exchange rate plays a crucial role in determining the long-run behavior of U.S. farm income, but has little effect in the short-run. We also find that the commodity price and interest rate have been significant determinants of U.S. farm income in both the short- and long-run over the past two decades.autoregressive distributed lag model, commodity price, exchange rate, farm income, interest rate, long-run, short-run, Agribusiness, Consumer/Household Economics, Farm Management, Financial Economics, C22, E23, Q11,

The U.S. Agricultural Sector and the Macroeconomy

The effects of the exchange rate, the U.S. agricultural price, the domestic income, and the interest rate on the U.S. net farm income are investigated in a cointegration framework. For this purpose, the Phillips-Hansen fully-modified cointegration (FM-OLS) procedure is applied to annual data for the period 1957–2008. Results suggest that there exists the long-run equilibrium relationship between the U.S. net farm income and the selected macroeconomic variables. We also find that the exchange rate and U.S. agricultural price are more important than other variables in determining the U.S. net farm income.agricultural price, exchange rate, gross domestic product, interest rate, net farm income, Phillips-Hansen fully-modified cointegration technique, Agribusiness, Agricultural Finance, Land Economics/Use, Production Economics, Research Methods/ Statistical Methods, C22, E23, Q11,