Shock persistence in Canada's forest products markets

The forest products sector continues to be a major contributor to many regional economies within Canada. Traditional markets for these products have been subjected to several unexpected shifts. How long are the impacts of these economic shocks likely to persist? In this paper, price persistence was calculated by two measures for Canada's major forest products. The first measure uses an autoregressive time series model to estimate the average half-life of shocks, whereas the second measure is based on a non-parametric variance ratio statistic, which isolates the fraction of shocks that are expected to have lasting effects. The results reveal that for most forest products, price shocks are largely transitory in nature, eventually dying out, but the process often takes several years and can have some permanent impacts.