Elasticity of risk aversion and international trade
AbstractThis note 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. though the home currency is revaluating (devaluating) exports of the firm increase (decrease). This fact may contribute to the explanation of disturbing empirical results.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 92 (2006)
Issue (Month): 1 (July)
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Web page: http://www.elsevier.com/locate/ecolet
Other versions of this item:
- Udo Broll & Jack E. Wahl & Wing-Keung Wong, 2005. "Elasticity of risk aversion and international trade," Monash Economics Working Papers 07/05, Monash University, Department of Economics.
- Udo Broll & Jack E. Wahl & Wing-Keung Wong, 2005. "Elasticity of risk aversion and international trade," Departmental Working Papers wp0510, National University of Singapore, Department of Economics.
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F31 - International Economics - - International Finance - - - Foreign Exchange
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