Are Shocks to Wood Fuel Production Permanent? Evidence from the EU

This paper investigates whether shocks (economic effects) to wood fuel production for 18 countries of the European Union (EU) over the period 1961–2012 are temporary or persistent. A variety of time-series and panel data unit root tests are employed. The presence of structural breaks is taken into account when performing those tests. Wood production in approximately 78% of the countries is found to follow a non-stationary process supported by the result that most of the panel unit root tests also point towards a non-stationary process. This indicates that the economic effect will tend to be persistent and suggests that policies affecting wood fuel production, implicitly or explicitly, will have enduring effects. For instance, forest conservation policies will persistently reduce the wood fuel production level.

[1]  V. Jaunky.  Are shocks to copper consumption persistent? , 2013 .

[2]  F. X. Johnson,et al.  What woodfuels can do to mitigate climate change , 2010 .

[3]  D. Andrews,et al.  Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis , 1992 .

[4]  K. Koedijk,et al.  Purchasing Power Parity and the Euro Area , 2004 .

[5]  Karim Barhoumi.  Long Run Exchange Rate Pass-Through Into Import Prices In Developing Countries: An Homogeneous or Heterogeneous Phenomenon? , 2005 .

[6]  Kaddour Hadri,et al.  Testing for Stationarity in Heterogeneous Panel Data , 2000 .

[7]  Hiro Y. Toda.  Finite Sample Performance of Likelihood Ratio Tests for Cointegrating Ranks in Vector Autoregressions , 1995, Econometric Theory.

[8]  Sune Karlsson,et al.  On the power and interpretation of panel unit root tests , 1999 .

[9]  Lawrence J. Christiano,et al.  Searching for a Break in Gnp , 1988 .

[10]  P. Perron,et al.  The Great Crash, The Oil Price Shock And The Unit Root Hypothesis , 1989 .

[11]  R. Fisher,et al.  Statistical Methods for Research Workers , 1930, Nature.

[12]  J. Breitung,et al.  Testing for Cointegration in High-Dimensional Systems , 2009 .

[13]  Anindya Banerjee,et al.  Some Cautions on the Use of Panel Methods for Integrated Series of Macroeconomic Data , 2004 .

[14]  David G. Loomis,et al.  Are Shocks to Natural Gas Consumption Temporary or Permanent? Evidence From a Panel of U.S. States , 2010 .

[15]  Jack Strauss,et al.  Shortfalls of panel unit root testing , 2003 .

[16]  M. Pesaran,et al.  Testing for unit roots in heterogeneous panels , 2003 .

[17]  Vinod Mishra,et al.  Are fluctuations in energy consumption per capita transitory? Evidence from a panel of Pacific Island countries , 2009 .

[18]  Lutz Kilian,et al.  Size distortions of tests of the null hypothesis of stationarity: evidence and implications for the PPP debate , 2001 .

[19]  P. Phillips,et al.  Prewhitening Bias in Hac Estimation , 2003 .

[20]  G. Maddala,et al.  A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test , 1999 .

[21]  Mark P. Taylor,et al.  The behavior of real exchange rates during the post-Bretton Woods period , 1998 .

[22]  Luis A. Gil-Alana,et al.  An analysis of oil production by OPEC countries: Persistence, breaks, and outliers , 2011 .

[23]  C. Nelson,et al.  Trends and random walks in macroeconmic time series: Some evidence and implications , 1982 .

[24]  Arnaldo Walter,et al.  Global Wood Pellets Markets and Industry: Policy Drivers, Market Status and Raw Material Potential , 2007 .

[25]  P. O'Connell.  The overvaluation of purchasing power parity , 1998 .

[26]  M. Pesaran.  A Simple Panel Unit Root Test in the Presence of Cross Section Dependence , 2003 .

[27]  In Choi.  Asymptotic Normality of the Least-Squares Estimates for Higher Order Autoregressive Integrated Processes with Some Applications , 1993, Econometric Theory.

[28]  Russell Smyth,et al.  Are shocks to energy consumption permanent or temporary? Evidence from 182 countries , 2007 .

[29]  Andrew T. Levin,et al.  Unit root tests in panel data: asymptotic and finite-sample properties , 2002 .

[30]  Russell Smyth,et al.  Are fluctuations in energy variables permanent or transitory? A survey of the literature on the integration properties of energy consumption and production , 2013 .

[31]  P. Phillips,et al.  Testing the null hypothesis of stationarity against the alternative of a unit root: How sure are we that economic time series have a unit root? , 1992 .

[32]  K. Hadri,et al.  A Simple Panel Stationarity Test in the Presence of Cross-Sectional Dependence , 2008 .

[33]  Gunnar Köhlin,et al.  Fuelwood revisited: what has changed in the last decade? , 2003 .

[34]  P. A. Clark.  Use of the vacuum extractor by midwives--what has changed in the last decade? , 2005, Journal of midwifery & women's health.

[35]  P. Phillips.  Testing for a Unit Root in Time Series Regression , 1988 .

[36]  M. Kendall.  Statistical Methods for Research Workers , 1937, Nature.

[37]  P. Narayan,et al.  A new unit root test with two structural breaks in level and slope at unknown time , 2010 .

[38]  Russell Smyth,et al.  Are oil shocks permanent or temporary? panel data evidence from crude oil and NGL production in 60 countries , 2008 .

[39]  K. Hadri,et al.  A Simple Panel Stationarity Test in the Presence of Serial Correlation and a Common Factor , 2012 .

[40]  Wonho Song,et al.  Testing for Unit Roots in Small Panels with Short-run and Long-run Cross-sectional Dependencies , 2009 .

[41]  Junsoo Lee,et al.  Stationarity of Inflation: Evidence from Panel Unit Root Tests with Trend Shifts , 2010 .