Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/211716 
Year of Publication: 
1995
Series/Report no.: 
Bank of Finland Discussion Papers No. 3/1995
Publisher: 
Bank of Finland, Helsinki
Abstract: 
The optimum behavior of a competitive risk-averse international trader who supplies or demands commodities invoiced in foreign currency is examined when his profits are subject to several forms of risk: production, domestic cost, the exchange rate and the commodity price.The focus of the analysis lies in the optimality conditions for the level of trade and the extent of forward exchange and commodity futures commitments.New results on the implications of the framework for the separation and the double-hedging theorems are derived.The behavior of the same firm with and without complete markets is compared and conditions are obtained for a domestic price guarantee or a gradual introduction of missing markets to promote the level of international trade.
JEL: 
D81
D84
F19
F31
Persistent Identifier of the first edition: 
ISBN: 
951-686-441-4
Document Type: 
Working Paper

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