Testing Convergence between Roundwood Pirces in Finland and Estonia

Based on the Johansen's cointegration method, this study analyses the convergence of the Finnish and Estonian coniferous prices and if there exist any long rum relationships between the wood assortments and species. The data is monthly time series from nominal delivery prices of spruce and pine sawlogs and pulpwood from the time period 1996-2003. Mainly, the results do not support the hypothesis of long run equilibrium of the roundwood prices between Finland and Estonia. Only the prices of pine sawlogs may contain information on the long run relationship. According to the descriptive trend analysis, however, all coniferous prices are converging against each other, and, if the trend growth of Estonia prices continues, they will coincide with Finnish prices in the forthcoming few years.