How to finish edges of drywall between exposed wall studs
Why not get some lauan plywood and use that instead? I think it would be easier and cheaper. If you're leaving the studs exposed then the wall must not be a firewall of any sort so you should be okay to use another type of wood. I think you'll end up with much better seems butting up to the sides of your studs. You can also paint it if you desire. If you wanted the studs to be a different color/stain I might do those first then put up your inside material.