EFFECTS OF CHINESE CURRENCY REVALUATION ON WORLD FIBER MARKETS

A partial equilibrium model is used to analyze effects of Chinese currency revaluation on world fiber markets. Unique characteristics of this model include incorporation of a regional supply response of cotton, substitutability between cotton and manmade fibers, and linkage between raw fiber and tex...

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Bibliographic Details
Published in:Contemporary economic policy 2007-04, Vol.25 (2), p.185-205
Main Authors: PAN, SUWEN, MOHANTY, SAMARENDU, WELCH, MARK, ETHRIDGE, DON, FADIGA, MOHAMADOU
Format: Article
Language:English
Subjects:
Agriculture
American dollar
Currency revaluation
Economic aspects
Economic impact
Economic theory
Fibers
International aspects
Manufacturing
Plant fiber industry
Plant fibre industry
Renminbi
Revaluation (Currency)
Studies
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Summary:A partial equilibrium model is used to analyze effects of Chinese currency revaluation on world fiber markets. Unique characteristics of this model include incorporation of a regional supply response of cotton, substitutability between cotton and manmade fibers, and linkage between raw fiber and textile sectors. Simulation results show renminbi revaluation is likely to increase China’s fiber imports and lower domestic cotton prices. Internationally, the world cotton price, polyester price, and cotton trade are expected to increase. A scenario modeling currency devaluation in China is run to test the stability of the model and ascertain its accordance with economic theory. (JEL F17, F42, F47, O2)
ISSN:1074-3529
1465-7287
DOI:10.1111/j.1465-7287.2006.00025.x