Elasticity of risk aversion and international trade

Udo Broll, Jack Wahl and Wing-Keung Wong

No 07/05, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This note analyzes export production in the presence of exchange rate uncertainty under mean-variance preferences. We present the elasticity of risk aversion, since this elasticity concept permits a distinct investigation of risk and expectation effects on exports. Counterintutitive results are possible, e.g. though the home currency is revaluating (devaluating) exports of the firm increase (decrease). This fact may contribute to the explanation of disturbing empirical results.

Keywords: Exchange rate risk; trade; elasticity of risk aversion; meanvariance model; devaluation (search for similar items in EconPapers)
JEL-codes: F21 F31 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2005-05-02
New Economics Papers: this item is included in nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Elasticity of risk aversion and international trade (2006)
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