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The co-movement between cotton and polyester prices

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Author Info
Baffes, John
Gohou, Gaston

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Abstract

The authors examine the price linkages among polyester (the dominant chemical fiber), cotton (the dominant natural fiber), and crude oil (the dominant energy commodity), based on monthly data between 1980 and 2002. The modeling framework incorporates several aspects of the unit root econometrics literature. They find that: a) There is strong co-movement between cotton and polyester prices, well above the co-movement observed between these two prices and prices of other primary commodities. b) Crude oil prices have a stronger effect on polyester prices compared with cotton prices. c) Price shocks originating in the polyester market are transmitted at much higher speed to the cotton market than vice-versa.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3534.

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Date of creation: 01 Mar 2005
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Handle: RePEc:wbk:wbrwps:3534

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Keywords: Markets and Market Access Access to Markets Textiles Apparel&Leather Industry Environmental Economics&Policies Crops&Crop Management Systems

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  20. Baffes, John, 2004. "Cotton : Market setting, trade policies, and issues," Policy Research Working Paper Series 3218, The World Bank. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Shepherd, Ben, 2006. "Estimating Price Elasticities of Supply for Cotton: A Structural Time-Series Approach," MPRA Paper 1252, University Library of Munich, Germany. [Downloadable!]
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