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The co-movement between cotton and polyester prices

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  • Baffes, John
  • Gohou, Gaston

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.

Suggested Citation

  • Baffes, John & Gohou, Gaston, 2005. "The co-movement between cotton and polyester prices," Policy Research Working Paper Series 3534, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3534
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    References listed on IDEAS

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    Cited by:

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    4. Susan Whiting, 2011. "Values in Land: Fiscal Pressures, Land Disputes and Justice Claims in Rural and Peri-urban China," Urban Studies, Urban Studies Journal Limited, vol. 48(3), pages 569-587, February.

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