Interlinked Roundwood Markets in Sweden, Norway and Finland : An econometric study of roundwood assortment prices

Market integration is a frequently discussed topic. This study presents an econometric analysis of the interlinkages between the Swedish, Norwegian, and Finnish coniferous roundwood assortment markets by conducting the Johansen’s co-integration test. It also investigates the directional causality between markets concluded integrated. The data utilised consists of quarterly, nominal prices for pine, and spruce saw logs and pulpwood for each country. Because of issues regarding stationary price series, the co-integration test could only be tested on five markets; Swedish and Norwegian pine saw logs and Swedish, Norwegian and Finnish spruce pulpwood. Swedish and Norwegian pine saw log prices were found integrated according to the Johansen’s test, but no relationship was found when performing the Granger causality test, implying that the underlying assumption of non-stationary prices may not have been fulfilled. No linkages were found concerning the spruce pulpwood markets; neither for all three countries nor bi-variate.