Document Type

Journal Article

Department/Unit

Department of Economics

Language

English

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.

Keywords

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

Publication Date

2006

Source Publication Title

Economics Letters

Volume

92

Issue

1

Start Page

126

End Page

130

Publisher

Elsevier

Peer Reviewed

1

DOI

10.1016/j.econlet.2006.01.031

Link to Publisher's Edition

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

ISSN (print)

01651765

Included in

Economics Commons

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