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Article: Export-Flexible Firms and Forward Markets

TitleExport-Flexible Firms and Forward Markets
Authors
Issue Date2002
PublisherRoutledge. The Journal's web site is located at http://www.tandf.co.uk/journals/titles/10168737.asp
Citation
International Economic Journal, 2002, v. 16 n. 3, p. 81-95 How to Cite?
AbstractThis paper examines the production and hedging decisions of an exporting firm under exchange rate uncertainty. The firm is export flexible in that it can distribute its output to either the domestic market or a foreign market, after observing the realized spot exchange rate. The firm is a monopoly in the domestic market but a price-taker in the foreign market. It is shown that the separation theorem holds if selling exclusively in the domestic market is suboptimal even under the most unfavorable sport exchange rate. Otherwise, the firm's optimal output depends on its preference and on the underlying exchange rate uncertainty. Furthermore, the export-flexible firm underhedges its exchange rate risk exposure in a currency forward market wherein the forward exchange rate contains a non-positive risk premium. [D21, F31]
Persistent Identifierhttp://hdl.handle.net/10722/85580
ISSN
2015 SCImago Journal Rankings: 0.187

 

DC FieldValueLanguage
dc.contributor.authorWong, KPen_HK
dc.date.accessioned2010-09-06T09:06:48Z-
dc.date.available2010-09-06T09:06:48Z-
dc.date.issued2002en_HK
dc.identifier.citationInternational Economic Journal, 2002, v. 16 n. 3, p. 81-95en_HK
dc.identifier.issn1016-8737en_HK
dc.identifier.urihttp://hdl.handle.net/10722/85580-
dc.description.abstractThis paper examines the production and hedging decisions of an exporting firm under exchange rate uncertainty. The firm is export flexible in that it can distribute its output to either the domestic market or a foreign market, after observing the realized spot exchange rate. The firm is a monopoly in the domestic market but a price-taker in the foreign market. It is shown that the separation theorem holds if selling exclusively in the domestic market is suboptimal even under the most unfavorable sport exchange rate. Otherwise, the firm's optimal output depends on its preference and on the underlying exchange rate uncertainty. Furthermore, the export-flexible firm underhedges its exchange rate risk exposure in a currency forward market wherein the forward exchange rate contains a non-positive risk premium. [D21, F31]-
dc.languageengen_HK
dc.publisherRoutledge. The Journal's web site is located at http://www.tandf.co.uk/journals/titles/10168737.aspen_HK
dc.relation.ispartofInternational Economic Journalen_HK
dc.titleExport-Flexible Firms and Forward Marketsen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=1016-8737&volume=16&spage=81&epage=95&date=2002&atitle=Export-Flexible+Firms+and+Forward+Marketsen_HK
dc.identifier.emailWong, KP: kpwong@econ.hku.hken_HK
dc.identifier.authorityWong, KP=rp01112en_HK
dc.identifier.doi10.1080/10168730200000022-
dc.identifier.hkuros81809en_HK
dc.identifier.volume16-
dc.identifier.issue3-
dc.identifier.spage81-
dc.identifier.epage95-
dc.publisher.placeUnited Kingdom-

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