Exchange Rates and the Competitiveness of the US Timber Sector in a Global Economy

This paper examines the competitiveness of the US timber industry under different exchange rate policies using a dynamic optimization model of global timber markets. We assume that exchange rates affect the cost structure of harvesting and managing forests and simulate the model for baseline conditions and four additional exchange rate policies. Two policies consider a strengthening United States dollar scenario and two policies examine weak South American currencies. Recently South America has increased its share of global timber production and is shipping increasing quantities of timber to the Unites States. The results indicate that US competitiveness in the forestry sector is sensitive both to strong US $ policies and to the weak currency policies pursued by South American governments. A 20% increase in value of the US $ compared to all other currencies can reduce harvests by 4 7% in the United States over the next 50 years, while a similar reduction in currency values in South America can reduce U.S. production by around 0.4%. In dollar terms, each additional cubic meter of wood produced in South America due to currency policies can reduce producer surplus in the United States by $100.


Issue Date:
2005
Publication Type:
Conference Paper/ Presentation
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/19439
PURL Identifier:
http://purl.umn.edu/19439
Total Pages:
25
Series Statement:
Selected Paper 135236




 Record created 2017-04-01, last modified 2019-08-26

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)