The effect of exchange rates on southern pine exports

Abstract

Changes in exchange rates affect southern pine exports by changing the cost of southern wood in foreign markets. A strong dollar discourages exports; a weak dollar encourages exports. A simple economic export market model is developed to determine whether changes in the exchange rates in foreign markets of southern pine products have, in fact, let to significant chnages in southern pine exports. The results confirm that exchange rates are important determinants of southern pine exports. Per-capita income in foreign markets and domestic southern pine relative prices are also important determinants of exports. the estimated model can be used to predict the response of southern pine exports to exchange rate movements. The results also indicate that is is not necessary to construct a special southern pine exchange rate index based on southern pine export markest. The Federal Reserve Board broad index serves quite well as a predictor of the effect of exchange rate movemnents on southern pine exports.

Citation

Wisdom, H.W.; Granskog, James E. 2003. The effect of exchange rates on southern pine exports. Forest Products Journal 53(10): 19-23