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US Cotton Exports to Textile Producers: The Effects of Bilateral Exchange Rates

Durmaz, Nazif and Thompson, Henry (2010): US Cotton Exports to Textile Producers: The Effects of Bilateral Exchange Rates.

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Abstract

This paper estimates exchange rate sensitivity since the 1970s of US cotton exports to three textile producers with floating or regularly adjusting exchange rates: Bangladesh, Indonesia, and Thailand. The import market model includes mill use, US production cost, an alternate supply, and the Asian financial crisis. Exchange rate behavior and sensitivity varies considerably across the three importers. Aggregation of the three importers in fact hides market behavior. Changes in the rate of depreciation have stronger effects than depreciation itself.

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