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Article: Transparency and Risk Sharing in International Trade

TitleTransparency and Risk Sharing in International Trade
Authors
Issue Date2014
PublisherBlackwell Publishing Ltd.
Citation
The Manchester School, 2014, v. 82, p. 716-731 How to Cite?
AbstractThe paper examines the impact of uncertainty on the decision problem of an international firm. The uncertainty under which the firm decides on home and foreign supply is affected by an information system that conveys public signals about the random spot exchange rate. The transparency in the foreign exchange market is defined by the informativeness of the information system. Our notion of transparency thus proposes an information-based concept of uncertainty. In this setting, we revisit the link between the transparency in the foreign exchange market and the behavior of the international firm. While more transparency may lead to higher or lower domestic sales and foreign exports, we show that the firm's expected profits always go up. The welfare of domestic consumers, by contrast, may increase or decrease with higher transparency in the foreign exchange market.
Persistent Identifierhttp://hdl.handle.net/10722/206841
ISSN
2015 Impact Factor: 0.261
2015 SCImago Journal Rankings: 0.230

 

DC FieldValueLanguage
dc.contributor.authorBroll, U-
dc.contributor.authorEckwert, B-
dc.contributor.authorWong, KP-
dc.date.accessioned2014-12-02T10:13:30Z-
dc.date.available2014-12-02T10:13:30Z-
dc.date.issued2014-
dc.identifier.citationThe Manchester School, 2014, v. 82, p. 716-731-
dc.identifier.issn1463-6786-
dc.identifier.urihttp://hdl.handle.net/10722/206841-
dc.description.abstractThe paper examines the impact of uncertainty on the decision problem of an international firm. The uncertainty under which the firm decides on home and foreign supply is affected by an information system that conveys public signals about the random spot exchange rate. The transparency in the foreign exchange market is defined by the informativeness of the information system. Our notion of transparency thus proposes an information-based concept of uncertainty. In this setting, we revisit the link between the transparency in the foreign exchange market and the behavior of the international firm. While more transparency may lead to higher or lower domestic sales and foreign exports, we show that the firm's expected profits always go up. The welfare of domestic consumers, by contrast, may increase or decrease with higher transparency in the foreign exchange market.-
dc.languageeng-
dc.publisherBlackwell Publishing Ltd.-
dc.relation.ispartofThe Manchester School-
dc.rightsThe definitive version is available at www.blackwell-synergy.com-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.titleTransparency and Risk Sharing in International Trade-
dc.typeArticle-
dc.identifier.emailWong, KP: kpwong@econ.hku.hk-
dc.identifier.authorityWong, KP=rp01112-
dc.description.naturepostprint-
dc.identifier.doi10.1111/manc.12042-
dc.identifier.hkuros241485-
dc.identifier.volume82-
dc.identifier.spage716-
dc.identifier.epage731-
dc.publisher.placeUnited Kingdom-

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