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Response of Cotton to Oil Price Shocks

Author

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  • Mutuc, Maria Erlinda M.
  • Pan, Suwen
  • Hudson, Darren

Abstract

This paper shows that the response of cotton prices in the U.S. to fluctuations in oil prices in the international market may differ greatly depending on whether the increase is driven by demand or supply shocks in the crude oil market. In the long-run, around 3 percent of the variability in cotton prices can be attributed to shocks to global demand for industrial commodities while none can be traced to oil supply shocks.

Suggested Citation

  • Mutuc, Maria Erlinda M. & Pan, Suwen & Hudson, Darren, 2010. "Response of Cotton to Oil Price Shocks," 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida 56425, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea10:56425
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    File URL: http://purl.umn.edu/56425
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    References listed on IDEAS

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    3. Yu, Tun-Hsiang (Edward) & Bessler, David A. & Fuller, Stephen W., 2006. "Cointegration and Causality Analysis of World Vegetable Oil and Crude Oil Prices," 2006 Annual meeting, July 23-26, Long Beach, CA 21439, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    8. Lutz Kilian, 2008. "Exogenous Oil Supply Shocks: How Big Are They and How Much Do They Matter for the U.S. Economy?," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 216-240, May.
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    Citations

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    Cited by:

    1. Richard Jaimes & Reyer Gerlagh, 2017. "Resource-Richness and Economic Growth in Contemporary U.S," CESifo Working Paper Series 6778, CESifo Group Munich.
    2. Reboredo, Juan C., 2012. "Do food and oil prices co-move?," Energy Policy, Elsevier, vol. 49(C), pages 456-467.
    3. Nazlioglu, Saban & Soytas, Ugur, 2011. "World oil prices and agricultural commodity prices: Evidence from an emerging market," Energy Economics, Elsevier, vol. 33(3), pages 488-496, May.
    4. Nazlioglu, Saban, 2011. "World oil and agricultural commodity prices: Evidence from nonlinear causality," Energy Policy, Elsevier, vol. 39(5), pages 2935-2943, May.
    5. Nazlioglu, Saban & Soytas, Ugur, 2012. "Oil price, agricultural commodity prices, and the dollar: A panel cointegration and causality analysis," Energy Economics, Elsevier, vol. 34(4), pages 1098-1104.

    More about this item

    Keywords

    cotton; oil price; demand shocks; supply shocks; structural vector autoregression (SVAR); Agricultural and Food Policy; Demand and Price Analysis; Q11; Q41;

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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