Liquidity constrained exporters: Trade and futures hedging

Arbeitspapier

We present a model of risk averse exporting firm subject to liquidity constraints. The firm enters an unbiased futuresmarket to hedge exchange rate risk and may not be able to satisfy high margin calls. Then the firm is forced toprematurely liquidate the futures position. We show that preferences and expectations become important for optimumexport and hedging decisions, i.e. separation theorem and full hedge theorem are violated. Furthermore, internationaltrade is affected, for only firms that have sufficient financial resources fully exploid gains from trade.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Dresden Discussion Paper Series in Economics ; No. 17/09

Classification and Topics

• Classification: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty ; Multinational Firms; International Business ; Foreign Exchange
• Subject: liquidity constraint ; trade ; futures ; hedging ; Exportindustrie ; Wechselkursrisiko ; Hedging ; Verschuldungsrestriktion ; Außenwirtschaft ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Broll, Udo ; Wahl, Jack E.
• Event: Veröffentlichung
• (who): Technische Universität Dresden, Fakultät Wirtschaftswissenschaften
• (where): Dresden
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/39802
• Last update: 10.03.2025, 11:43 AM CET