Document Type

Journal Article

Department/ Unit

Department of Economics

Abstract

This paper analyzes export production in the presence of exchange rate uncertainty under mean-variance preferences. We present the elasticity of risk aversion, since this elasticity concept permits a distinct investigation of risk and expectation effects on exports. Counterintutitive results are possible, e.g. although the home currency is revaluating (devaluating), exports by the firm increase (decrease). This fact may contribute to the explanation of disturbing empirical results.

Publication Year

2006

Journal Title

Economics Letters

Volume number

92

Issue number

1

Publisher

Elsevier

First Page (page number)

126

Last Page (page number)

130

Referreed

1

DOI

10.1016/j.econlet.2006.01.031

ISSN (print)

0165-1765

Link to Publisher’s Edition

http://dx.doi.org/10.1016/j.econlet.2006.01.031

Keywords

Exchange rate risk, Trade, Elasticity of risk aversion, Mean-variance model, Devaluation

Included in

Economics Commons

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