Income and price elasticities of demand for sawn wood and wood-based panels: a pooled cross-section and time-series analysis

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Abstract
Income and price elasticities of demand for coniferous and nonconiferous sawn wood, plywood, particle board, and fibreboard were estimated using yearly data from 43 countries, over the period 1963–1973. A static and a dynamic model were estimated by analysis of covariance and generalized least squares. The simpler technique, analysis of covariance, gave satisfactory estimates for both models. Demand for all products was found to be price inelastic, with long-term elasticities ranging from −0.1 for particle board to −0.2 for coniferous sawn wood. Price elasticities for plywood and nonconiferous sawn wood were not significantly different from zero but this result might only reflect price-data inadequacies. Long-term income elasticities were +0.7 and +0.5 for coniferous and nonconiferous sawn wood, respectively. Demand for all wood-based panels was income elastic, with long-term elasticities of +1.0 for plywood and fibreboard, and of +2.3 for particle board. The results indicated that in discussing elasticities of demand for forest products, the length of the time period should be specified. Full adjustment of demand to changing prices and income was shown to always take more than 1 year. Demand for fibreboard appeared to adjust most rapidly to changes in economic conditions; the demand for nonconiferous sawnwood adjusted most slowly.

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