Multiple uncertainty, forward-futures markets and international trade

Jean-Marie Viaene and Itzhak Zilcha

No 3/1995, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: The optimum behavior of a competitive risk-averse international trader who supplies or demands commodities invoiced in foreign currency is examined when his profits are subject to several forms of risk: production, domestic cost, the exchange rate and the commodity price.The focus of the analysis lies in the optimality conditions for the level of trade and the extent of forward exchange and commodity futures commitments.New results on the implications of the framework for the separation and the double-hedging theorems are derived.The behavior of the same firm with and without complete markets is compared and conditions are obtained for a domestic price guarantee or a gradual introduction of missing markets to promote the level of international trade.

JEL-codes: D81 D84 F19 F31 (search for similar items in EconPapers)
Date: 1995
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https://www.econstor.eu/bitstream/10419/211716/1/bof-rdp1995-003.pdf (application/pdf)

Related works:
Working Paper: Multiple Uncertainty, Forward-Futures Markets and International Trade (1995)
Working Paper: Multiple Uncertainty, Forward-Futures Markets and International Trade (1995)
Working Paper: Multiple uncertainty, forward-futures markets and international trade (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp1995_003

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