The co-movement between cotton and polyester prices

John Baffes () and Gaston Gohou

No 3534, Policy Research Working Paper Series from The World Bank

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.

Keywords: Markets and Market Access; Access to Markets; Textiles; Apparel&Leather Industry; Environmental Economics&Policies; Crops&Crop Management Systems (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2005-03-01
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