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| McGough, Bruce; Plantinga, Andrew J.; Provencher, Bill. |
| The problem of when to optimally harvest trees when timber prices evolve according to an exogenous stochastic process has been studied extensively in recent decades. However, little attention has been given to the appropriate form of the stochastic process for timber prices, despite the fact that the choice of a process has important effects on optimal harvesting decisions. We develop a simple theoretical model of a timber market and show that there exists a rational expectations equilibrium in which prices evolve according to a stationary ARMA(1,1) process. Simulations are used to analyze a model with a more general representation of timber stock dynamics and to demonstrate that the unconditional distribution for rational timber prices is asymmetric.... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Resource /Energy Economics and Policy. |
| Ano: 2002 |
URL: http://purl.umn.edu/12607 |
