Determinants of Pulp Producer Prices in Korea: Focused on Exchange Rate and Import Prices

This paper aims to analyze the impact of exchange rate, pulp import prices in US dollar, and interest rate on domestic pulp producer prices using monthly data from 1992 to 2022. The key findings of this paper can be summarized as follows. In the long-term analysis results, the estimated exchange rate pass-through effect on the pulp industry was found to be 1.02. This suggests that the exchange rate would significantly increase pulp producer prices. Pulp import prices also had a substantial impact on domestic pulp producer prices with an estimated effect of 0.95. This implies that fluctuations in import prices within the pulp industry can strongly influence domestic pulp producer prices. According to the estimation of the error correction model, the short-term impact of exchange rate and pulp import prices on domestic pulp prices were 0.93 and 0.88, respectively. The effects of exchange rate and import price fluctuations were found to be lower in the short run than in the long run. The large impact of exchange rate and import prices on domestic pulp prices indicates greater importance of the foreign sector in pulp industry compared to other industries in Korea.