MFA Fibers and Cotton Imported to the United States from China and Hong Kong - a Structural Change Analysis

Chi Keung Lau, Chester Kin-Man, Zhiming Zhang

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

Using the endogenous break augmented Dickey–Fuller test of Zivot and Andrews (J. Business Econ. Stat., 10, 251–70,1992), our study sheds light on the current research on MFA fibers mainly in cottons exported from Mainland China and Hong Kong to the United States. We determine the order of integration of time series variables to avoid spurious regression, as pointed out by Granger and Newbold (Journal of Econometrics, 2, 111–120. 1974). The variables are found as in different orders of integration and hence researchers should take caution when estimating export demand functions. We further investigate whether MFA cotton price and quantity demanded will converge to its arithmetic mean (equilibrium) in desirable period. We find mixed evidences. Finally, we trace the date on which the structural break of the series would take place in response to shock, such as MFA quota abolishment. The break date in year 2000 was detected, and it took about 1.6–6.5 months for the repercussion of the shock to diminish to half of its initial impulse.
LanguageEnglish
Pages29-36
Number of pages8
JournalJournal of the Textile Institute
Volume99
Issue number1
Early online date15 Nov 2007
DOIs
Publication statusPublished - 2008
Externally publishedYes

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Cotton Fiber
Hong Kong
Cotton
Shock
China
cotton
demand functions
econometrics
Fibers
lint cotton
Time series
time series analysis
researchers
Research Personnel
Research
Industry
testing

Cite this

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title = "MFA Fibers and Cotton Imported to the United States from China and Hong Kong - a Structural Change Analysis",
abstract = "Using the endogenous break augmented Dickey–Fuller test of Zivot and Andrews (J. Business Econ. Stat., 10, 251–70,1992), our study sheds light on the current research on MFA fibers mainly in cottons exported from Mainland China and Hong Kong to the United States. We determine the order of integration of time series variables to avoid spurious regression, as pointed out by Granger and Newbold (Journal of Econometrics, 2, 111–120. 1974). The variables are found as in different orders of integration and hence researchers should take caution when estimating export demand functions. We further investigate whether MFA cotton price and quantity demanded will converge to its arithmetic mean (equilibrium) in desirable period. We find mixed evidences. Finally, we trace the date on which the structural break of the series would take place in response to shock, such as MFA quota abolishment. The break date in year 2000 was detected, and it took about 1.6–6.5 months for the repercussion of the shock to diminish to half of its initial impulse.",
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MFA Fibers and Cotton Imported to the United States from China and Hong Kong - a Structural Change Analysis. / Lau, Chi Keung; Kin-Man, Chester; Zhang, Zhiming.

In: Journal of the Textile Institute, Vol. 99, No. 1, 2008, p. 29-36.

Research output: Contribution to journalArticle

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