Sweden's import substitution possibilities for roundwood

The substitution possibilities between imports and domestically produced goods and commodities are usually measured by Armington elasticities. These elasticities are essential parameters that have large affect on the result of trade models. The purpose of this study is to estimate disaggregated Armington elasticities for different segments of roundwood for Sweden. The data-set spans 1967–2007. The time-series are tested for non-stationary properties. The estimation fails to produce statistically significant elasticities for pulpwood but for sawlogs the estimated elasticity is 3.2. This is a relatively high estimate and indicates that imported and domestic sawlogs are easily substituted. In addition, event cases on the effect of various surrounding events (the fall of the Soviet Union and Sweden's membership in the EU) on the estimated Armington elasticities are tested. The results for these event cases indicate that the substitutability between imported and domestic pulpwood increased both with the fall of the Soviet Union and Sweden's membership in the EU. However, no such pattern could be observed for sawlogs.