LAUSR

ABSTRACT This study aims at finding out how China’s domestic and international timber markets interact with each other. Wald–Granger causality test, Geweke causality test and spectral Granger causality test were adopted to analyse daily data of domestic and imported logs and sawn timber prices. The results revealed that there was a significant Granger relationship between domestic and imported log markets and between domestic and imported sawn timber markets in both long and short terms, with a large proportion of instant feedback relationship. But the Granger tests for the relationship between the domestic log price and imported sawn timber price displayed a great difference. The Wald-Granger and Geweke causality test results showed that there was Granger relationship between the above two markets, but the result of spectral Granger causality test suggested that the domestic log price was not the Granger cause of the imported sawn timber price in the frequency domain of [0, π]. The results of empirical analysis proved a strong conductive relationship between the China’s domestic timber market and international market and displayed the complicated interaction between domestic and international timber markets which have strong policies implication for both government and enterprises in China.