International Trade and the Risk Premium in the Currency Forward Market

Bernhard Eckwert () and Udo Broll
Additional contact information
Bernhard Eckwert: University of Chemnitz, Postal: Bernhard Eckwet, University of Chemnitz, Reichenhainer Strasse 39, 09107 Chemnitz, Germany
Udo Broll: University of Konstanz, Postal: University of Konstanz

Journal of Economic Integration, 1998, vol. 13, 662-672

Abstract: In this paper we present an intertemporal model of the spot and forward markets for foreign exchange. We analyze the implications of central bank interventions on the spot market for the risk premium in the currency forward market and discuss the consequences for the allocation of exchange rate risk and for the volume of international trade. As a main result we find that exchange rate volatility does not generate systematic risk and hence does not adversely affect international trade as long as the monetary authorities do not exogenously intervene in the foreign exchange spot market.

Keywords: International Trade; the Risk Premium (search for similar items in EconPapers)
JEL-codes: F11 F31 F33 (search for similar items in EconPapers)
Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0093

Access Statistics for this article

Journal of Economic Integration is currently edited by Seongeun Kim

More articles in Journal of Economic Integration from Center for Economic Integration, Sejong University Contact information at EDIRC.
Bibliographic data for series maintained by Yunhoe Kim ().