SHORT-TERM INFLUENCES ON CANADIAN WOOD PULP PRICES AND EXPORTS - A VECTOR AUTOREGRESSION ANALYSIS

The short-run dynamic impacts of macroeconomic variables on the Canadi an pulp industry are investigated using the vector autoregression appr oach. The results show that shocks in the G10 exchange rate and the U. S. pulp price significantly affect Canadian pulp prices but not Canadi an 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 re sults also suggest that the indirect effect of shocks in the macroecon omy are important in explaining the dynamics of Canadian pulp price an d pulp exports.