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Multiple Uncertainty, Forward-Futures Markets and International Trade

Author

Listed:
  • Viaene, J.M.
  • Zilcha, I.

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 our study is the robustness of the known results regarding the role of forward-futures markets in the presence of cost and output uncertainty. 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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Viaene, J.M. & Zilcha, I., 1995. "Multiple Uncertainty, Forward-Futures Markets and International Trade," Papers 11-95, Tel Aviv.
    • Handle: RePEc:fth:teavfo:11-95
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    Cited by:

    1. Kajanoja, Lauri, 1995. "Aggregate investment and corporate indebtedness , Some empirical avidence from Finland," Bank of Finland Research Discussion Papers 10/1995, Bank of Finland.
    2. Saarenheimo, Tuomas, 1995. "Credit crunch caused investment slump? : An empirical analysis using finnish data," Research Discussion Papers 6/1995, Bank of Finland.
    3. Murto, Risto, 1995. "The banking crisis, banking policy regimes and the value of a bank," Research Discussion Papers 14/1995, Bank of Finland.
    4. Hilpinen, Jorma, 1995. "Compilation of early warning indicators for foreign trade employing a cut-off survey," Bank of Finland Research Discussion Papers 25/1995, Bank of Finland.
    5. Takala, Kari, 1995. "Permanent income hypothesis and saving in Finland," Bank of Finland Research Discussion Papers 15/1995, Bank of Finland.
    6. Murto, Risto, 1995. "The banking crisis, banking policy regimes and the value of a bank," Bank of Finland Research Discussion Papers 14/1995, Bank of Finland.

    More about this item

    Keywords

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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • F19 - International Economics - - Trade - - - Other
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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