Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101614
Authors: 
Broll, Udo
Wahl, Jack E.
Year of Publication: 
1995
Series/Report no.: 
Diskussionsbeiträge: Serie II, Sonderforschungsbereich 178 "Internationalisierung der Wirtschaft", Universität Konstanz 284
Abstract: 
We study the impact of exchange rate risk on an exporting firm in a developing country when there is no forward market in the foreign currency. However there exists a forward traded asset in this country the price of which is highly correlated to the foreign currency. By indirectly hedging its foreign exchange exposure the firm can increase its economic welfare. Furthermore export production increases and promotes international trade of the developing country if the spot rate of foreign exchange has a regression relationship with the price of the forward traded asset.
Subjects: 
missing markets
export production
exchange rate risk
cross hedging
wealth risk
JEL: 
O12
O16
Document Type: 
Working Paper

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