Foreign production and international hedging in a multinational firm

Udo Broll ()

Open Economies Review, 1993, vol. 4, issue 4, 425-432

Abstract: This paper presents a model of a risk-averse multinational firm under exchange rate risk. The firm, which owns and controls assets in two countries, is engaged in foreign production, sales, and foreign currency forward contracting. The implications of the existence of forward markets in global market decisions are discussed. It is shown that a separation theorem holds. The optimal hedging behavior is also discussed. Copyright Kluwer Academic Publishers 1993

Keywords: multinational firm; foreign production; exchange rate uncertainty; hedging; forward markets (search for similar items in EconPapers)
Date: 1993
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DOI: 10.1007/BF01011139

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