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The co-movement between cotton and polyester prices

Author

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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:

    1. Rifin, Amzul, 2009. "Price Linkage between International Price of Crude Palm Oil (CPO) and Cooking Oil Price in Indonesia," 2009 Conference, August 16-22, 2009, Beijing, China 50828, International Association of Agricultural Economists.
    2. Shepherd, Ben, 2006. "Estimating Price Elasticities of Supply for Cotton: A Structural Time-Series Approach," MPRA Paper 1252, University Library of Munich, Germany.

    More about this item

    Keywords

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

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