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EFFECTS OF CHINESE CURRENCY REVALUATION ON WORLD FIBER MARKETS
Author(s) -
PAN SUWEN,
MOHANTY SAMARENDU,
WELCH MARK,
ETHRIDGE DON,
FADIGA MOHAMADOU
Publication year - 2007
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.2006.00025.x
Subject(s) - economics , renminbi , devaluation , currency , monetary economics , linkage (software) , international economics , local currency , china , commerce , exchange rate , law , political science , biochemistry , chemistry , gene
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)