EFFECTS OF CHINESE CURRENCY REVALUATION ON WORLD FIBER MARKETS

Authors

  • SUWEN PAN,

    1. Pan: Research Scientist, Department of Agricultural and Applied Economics, Texas Tech University, P.O. Box 42132, Lubbock, TX 79409. Phone 806-742-2821, Fax 806-742-1099, E-mail s.pan@ttu.edu
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      The authors thank anonymous reviewers for their comments and suggestions. Material in this publication is based on work supported by the Cooperative State Research Education and Extension Service, U.S. Department of Agriculture.

  • SAMARENDU MOHANTY,

    1. Mohanty: Associate Professor, Department of Agricultural and Applied Economics, Texas Tech University, P.O. Box 42132, Lubbock, TX 79409. Phone 806-742-2821, Fax 806-742-1099, E-mail sam.mohanty@ttu.edu
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      The authors thank anonymous reviewers for their comments and suggestions. Material in this publication is based on work supported by the Cooperative State Research Education and Extension Service, U.S. Department of Agriculture.

  • MARK WELCH,

    1. Welch: Research Associate, Department of Agricultural and Applied Economics, Texas Tech University, P.O. Box 42132, Lubbock, TX 79409. Phone 806-742-2821, Fax 806-742-1099, E-mail james.m.welch@ttu.edu
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      The authors thank anonymous reviewers for their comments and suggestions. Material in this publication is based on work supported by the Cooperative State Research Education and Extension Service, U.S. Department of Agriculture.

  • DON ETHRIDGE,

    1. Ethridge: Professor, Department of Agricultural and Applied Economics, Texas Tech University, P.O. Box 42132, Lubbock, TX 79409. Phone 806-742-2821, Fax 806-742-1099, E-mail don.ethridge@ttu.edu
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      The authors thank anonymous reviewers for their comments and suggestions. Material in this publication is based on work supported by the Cooperative State Research Education and Extension Service, U.S. Department of Agriculture.

  • MOHAMADOU FADIGA

    1. Fadiga: Research Scientist, Department of Agricultural and Applied Economics, Texas Tech University, P.O. Box 42132, Lubbock, TX 79409. Phone 806-742-2821, Fax 806-742-1099, E-mail mohamadou.fadiga@ ttu.edu
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      The authors thank anonymous reviewers for their comments and suggestions. Material in this publication is based on work supported by the Cooperative State Research Education and Extension Service, U.S. Department of Agriculture.


Abstract

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)

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