Abstract
This paper investigates whether shocks to pulp for paper production for 17 Organisation for Economic Co-Operation and Development (OECD) members over the period 1980–2012 are transitory or permanent. A variety of univariate and panel data unit root tests are employed. The presence of structural breaks is taken into account when performing those tests. Based on the Narayan-Popp univariate unit root test, wood production series for approximately 64.71% of countries is found to follow a non-stationary process. However, univariate unit root tests tend to have low power when the time span is relatively short. Consequently, three generations of panel unit root tests are considered. Cross-sectional dependence is detected. The first generation of unit roots do not effectively control for cross-sectional dependence, while the second and third generations do. The third generation accounts mainly for cross-sectional co-integration. As a confirmatory analysis, both unit root tests that tests for the null of non-stationarity and stationarity are considered. Most of the panel unit root tests point towards a non-stationary process. Hence, while these shocks can be transmitted to other economic sectors, past behaviours of wood production cannot be used for forecasting purposes. Forest conservation policies can have a permanent impact on pulp for paper production.
Highlights
IntroductionNon-wood (e.g., cotton, linen fibres, etc.) and wood resources currently are being used to produce pulp, paper, soft boards, etc
Non-wood and wood resources currently are being used to produce pulp, paper, soft boards, etc
While these shocks can be transmitted to other economic sectors, past behaviours of wood production cannot be used for forecasting purposes
Summary
Non-wood (e.g., cotton, linen fibres, etc.) and wood resources currently are being used to produce pulp, paper, soft boards, etc. Wood has been exploited since the development of mechanical pulping in 1840. The timber resources used to make wood pulp are referred to as pulpwood. Wood pulp comes from softwood trees, such as spruce, pine, fir, larch, and hemlock, and hardwoods such as eucalyptus, aspen, and birch. It has been argued that there has been unsustainable deforestation, with a negative effect on the native forest ecosystems and habitats of several species, in connection to pulp and paper industry. This causes environmental concerns especially in the context of ecosystem services and climate change
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