COVID-19 and the mystery of lumber price movements
Date
2023
Authors
Zanello, Rebecca
Shi, Yin
Zeinolebadi, Atefeh
van Kooten, G. Cornelis
Journal Title
Journal ISSN
Volume Title
Publisher
Forests
Abstract
The COVID-19 pandemic led to unprecedented changes in the U.S. price of softwood
lumber by more than 300% between 2020 and 2022. The increased volatility of lumber prices after the
COVID-19 outbreak remains unexplained. In this paper, we examine how a calibrated random walk
can induce similar price volatility through the development of a stochastic process. As a preferred
approach, we employ an event model to estimate the impact of COVID-19 and other key events
on the price of softwood lumber. The econometric model serves to provide evidence that the price
volatility of softwood lumber is not completely random, and we can instead attribute part of the
variation to recent regional and global events. We found that, while COVID-19 did result in a price
jump, it was smaller than a rainfall event that restricted imports from Canada, while import duties
and other trade actions had no discernible impact on U.S. lumber prices.
Description
Keywords
lumber price volatility, stochastic processes, econometric regression
Citation
Zanello, R., Shi, Y., Zeinolebadi, A., & van Kooten, G. C. (2023). “COVID-19 and the mystery of lumber price movements.” Forests, 14(1), 152. https://doi.org/10.3390/f14010152