%0 Research article
%T Exchange rate changes and the Finnish sawnwood demand and price in the UK market
%A Hänninen, Riitta H.
%D 1998
%J Silva Fennica
%V 32
%N 1
%R doi:10.14214/sf.700
%U https://silvafennica.fi/article/700
%X This paper examines the long-run influence of exchange rate changes on  the Finnish sawnwood price in the United Kingdom (UK) using quarterly  data for the period 1978–1994. The degree of influence was measured by a  pass-through coefficient (PT) obtained from a markup pricing relation  of a system model. The model, which included export demand and price  equations, was estimated with the cointegration method of Johansen. The  results indicated a large PT, which means that exchange rate changes are  reflected almost proportionately in Finnish export price expressed in  pounds sterling. Thus, the Finnish price of sawnwood in pounds has  lowered as a result of depreciation of the Finnish markka (FIM). This  has improved Finnish competitiveness and market share in the UK.  Appreciation of the FIM has had the opposite effect. It seems that  Finnish exporters have made use of depreciations and devaluations of the  FIM to maintain and increase their market shares but not necessarily  their markups. For Finland, which is in the process of joining the  European economic and monetary union (EMU), knowing the size of the PT  is also important in assessing the economic impact of membership.