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Abstract
This paper compares the sensitivity of US cotton exports to the bilateral exchange rate
for three Asian textile producers with a long series of yearly data from 1978 to 2010.
The model of the cotton market includes an alternate supply, US production cost, and
local mill use. Effects of each bilateral exchange rate vary considerably across these
countries. Aggregation and the related trade weighted exchange rate lead to misleading
results. Changes in the rate of depreciation have more robust effects than depreciation,
suggesting a wealth effect on cash balance.