EUROPEAN UNION COTTON DEMAND: AN APPLICATION OF DEMAND SYSTEMS AND PANEL DATA

A demand system approach incorporating demographic variables is used to estimate the European Union cotton demand parameters. The European Union is the largest cotton importer of the world. Accurate estimation of European demand parameters is critical to evaluate world cotton trends and to realistically simulate future market scenarios. Unlike previous studies, this paper reports a research in which demands of the 15 European Union members are not aggregated. Moreover, unlike available estimations, the study does not use mill consumption data but cotton equivalent consumption at home.