Optimal timber stock in Finnish nonindustrial private forests

This study analyzed the short-term optimal timber stock adjustment behavior of nonindustrial private forest (NIPF) owners in Finland. We estimated the timber stock function using the Arellano and Bond [Arrellano, M., Bond, S., 1991. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies 58 (2), 277–297] two-step GMM estimator for balanced panel data of 1098 observations over the period 1983–1991. The ownerʹs age is the most important factor determining timber stock. The empirical findings supported the partial adjustment of the observed timber stock to the optimal stock level at a slow speed of adjustment. Despite the slow adjustment, the observed and optimal stock levels were almost the same during the study period on average.