Asymmetry in price transmission between the producer and the consumer prices in the wood sector and the role of imports: The case of Greece

Abstract

The present paper studies the existence of asymmetry in the price transmission mechanism between the producer and the consumer prices in the sector of forest products. In particular, the research is focused οn the round wood of long length (> 2 m). For the study of the asymmetry, the Johansen cointegration analysis was used while at the same time two dynamic models were estimated: The Error Correction Model (ECM Model), and the LSE−Henry general to specific model (GETS model). With the assistance of the cointegration technique, we surveyed the existence of a long-run relationship between the producers and the consumers in the Greek round wood market, while the application of the Granger causality test has shown that the consumer price Granger causes the producer price whereas the reverse is not valid. Furthermore, the application of the GETS model confirmed the existence of asymmetry in the price transmission mechanism within the round wood market. Finally, the role of imports in the determination of the producer prices is vital and is confirmed by the findings of the cointegration technique and the Granger causality test.