Disequilibrium and asymmetric price adjustment the case of the Swedish timber market

The major question raised in this paper is whether or not the Swedish timber market is in a state of disequilibrium. In recent discussions it has been claimed that the industry has been constrained in production because of timber shortage. In this paper I abandon the assumption of equality between demand and supply. The econometric model is based on a partial price adjustment model which allows for asymmetric adjustment. The test of equilibrium versus disequilibrium supports disequilibrium.This study was supported financially by grants from the research program private forestry at the Swedish Institute of Agricultural Engineering. I would like to thank Karl-Gustaf Löfgren for his insightful comments on earlier drafts. In addition, I would like to thank three anonymous referees for many useful suggestions.