Management of Natural Ecosystems

Management of Natural Ecosystems

Analyzing Inflation Persistence and Uncertainty in Iran's Wood Products Market: A Fractional Integration Approach in the Presence of Structural Breaks

Document Type : Original Article

Author
Mohammad Rezvani
Ph.D, Department of Agricultural Economics, Faculty of Economics and Agricultural Development, University of Tehran, Karaj, Iran.
10.22034/emj.2026.2085381.1152
Abstract
Wood products, as strategic commodities derived from renewable resources, play a vital role in sustainable development and carbon sequestration. However, the Iranian wood market has recently experienced severe price fluctuations which may threaten the sustainability of forest ecosystems. This study aims to estimate the degree of fractional integration (d) in the inflation rate of the Producer Price Index (PPI) for the wood and wood products sector in Iran, as well as to evaluate uncertainty in this market. The novelty of the present studylies in applying a fractional integration approach with Fourier approximation (ARFIMA-Fourier), which allows the intrinsic persistence of variables to be disentangled from "spurious memory" caused by structural break. The data used in this study consist of the quarterly price index for the wood sector from Spring 2001 to Summer 2025, collected from the Statistical Center of Iran.First, the uncertainty time series was extracted. Next, the fractional integration parameter (d) was estimatedfor both inflation and uncertainty. The findings of the study showed that wood sector inflation, with a fractional integration coefficient of 0.486, is a stationary process with long memory, implying that price shocks in this market are transitory, but their return to the mean occurs very slowly. Market uncertainty also exhibits long memory, with a fractional integration coefficient of 0.346, indicating that uncertainty in this market remains persistent and that the effects of shocks do not fade rapidly. The significance of Fourier coefficients in the models confirmed the role of events such as the Forest Breathing Plan and exchange rate volatility as structural breaks affecting price persistence. Based on the findings of the study, high inflation persistence may shorten producers' planning horizons, increase incentives for illegal logging, and intensify pressure on natural habitats. High inflation persistence reduces producers' planning horizons and intensifies incentives for illegal logging; therefore, policies aimed at stabilizing inflation expectations should be prioritized.
Keywords
Fractional Integration
Inflation Persistence
Long Memory
Structural Break
Wood Products
Subjects
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  • Receive Date 14 February 2026
  • Revise Date 05 June 2026
  • Accept Date 12 June 2026