The co-movement between cotton and polyester prices, Vol. 1 of 1

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The co-movement between cotton and polyester prices

Author:	Baffes, John; Gohou, Gaston;	Collection Title:	Policy, Research working paper ; no. WPS 3534
Country:	World;	Date Stored:	2005/03/09
Document Date:	2005/03/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	The World Region
Report Number:	WPS3534	SubTopics:	Environmental Economics & Policies; Markets and Market Access; Crops and Crop Management Systems; Textiles, Apparel & Leather Industry; Access to Markets
Volume No:	1 of 1

Summary: 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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