Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101671
Authors: 
Franke, Günter
Year of Publication: 
1986
Series/Report no.: 
Diskussionsbeiträge: Serie II, Sonderforschungsbereich 178 "Internationalisierung der Wirtschaft", Universität Konstanz 12
Abstract: 
Usually it is argued that an increase in exchange rate volatility reduces the volume of international trade since trading firms are risk averse. This paper shows for risk neutral firms that the expected international trade volume in standardized commodities grows with exchange rate volatility. The firms adjust their trade volume to the exchange rate level. The more favorable the exchange rate is, the higher is the export volume. If the rate drops below some level, exports are stopped. Thus international trading represents an option for firms. Its value increases with exchange rate volatility.
Document Type: 
Working Paper

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