Impacts of the currency value change on the forest products import quantities in Korea

Abstract

This study estimated the impacts of the currency value change on the forest products import quantities in Korea using vector autoregressive model. The first objective is to analyze whether there is any causal relationship between change in the currency value and changes in the import quantities of forest products in Korea. Assuming that there is any causal relationship, the second objective is to evaluate the dynamics of the impacts of the currency value change on the forest products import quantities in Korea. The causal relationship was analyzed by the causality test of Granger. The relationship between the currency value and the import quantity was represented by vector autoregressive model. And the dynamics were evaluated by variance decomposition analysis and impulse response analysis. Change in the currency value causes change in the hardwood roundwood import quantity in Korea. In the model of the hardwood roundwood import quantity, after 6 months, the currency value change accounts for approximately 10% of variation in the import quantity. On the other hand, the impact of a shock to the currency value is significant for approximately 10 months on the import quantity of hardwood roundwood in Korea.