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A structural model with interventions for new Zealand sawn timber production.pdf

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A structural model with interventions for new Zealand sawn timber production.pdf

A STRUCTURAL MODEL WITH INTERVENTIONS FOR NEW ZEALAND SAWN TIMBER PRODUCTION DONGWEN LUO, GEOFFREY JONES, AND JUDITH DENNIS Received 16 January 2005; Revised 16 May 2005; Accepted 17 May 2005 Timber production in New Zealand was privatized in 1987. We examine the eﬀects of this change on the level of New Zealand sawn timber production, and changes in the seasonal pattern, using a state-space model with intervention variables. We describe the formulation and estimation of the state-space model, and show how it can be used to examine both the structural changes around the time of privatization and the gradually evolving seasonal pattern in production. We also show how the model can be used to forecast future production. Copyright © 2006 Dongwen Luo et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. 1. Introduction The Statistics Section of the Ministry of Agriculture and Forestry, New Zealand, collects statistics on sawn timber production both annually (eﬀectively a census) and quarterly (a sample survey). Quarterly data is published provisionally, and ﬁnal ﬁgures are given when the annual survey has been completed. Figure 1.1 shows the quarterly ﬁgures for the period from March 1973 to June 2002 (118 values). The series shows a strong sea- sonal pattern with wave crest at quarter 3 (September) and trough at quarter 1 (March). The amplitude of the seasonal variation does not seem to increase as the level of the series increases, which suggests additive rather than multiplicative seasonality. The apparent dip in the series in the late 1980s coincides with the disestablishment of the New Zealand Forest Service and the sale or corporatisation of state forest assets (Brown and Valentine [2]; Clarke [4]; Rhodes and Novis [17]). Thereafter there appears to be a dramatic in- creas