Modeling Pulpwood Trade within the United States South

Abstract

Interregional trade of roundwood products is an important factor of regional roundwood markets. Until now, regional and subregional forest sector models did not account for the spatial aspects of roundwood markets. This article explores ways to model interregional trade of roundwood products. It compares the performance of different specifications of a gravity model (the model widely used in the analysis of international trade) and a fixed gravity coefficient model (common in regional input-output analysis) to forecast pulpwood trade between the states of the United States South. The gravity model estimated using nonlinear least-squares with fixed effects (NLS FEM) and the fixed gravity coefficient model (FGCM) showed the best results. Another important result of this study is the finding that the fixed gravity coefficients for pulpwood trade in the United States South are temporally stable. This suggests the possibility of using the FGCM for modeling roundwood trade in the absence of time series data.

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