haku: @author Wei, S-J. / yhteensä: 5
viite: 5 / 5
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| Tekijä: | Wei, S-J. |
| Otsikko: | Currency hedging and goods trade |
| Lehti: | European Economic Review
1999 : JUN, VOL. 43:7, p. 1371-1394 |
| Asiasana: | CURRENCY HEDGING EXCHANGE RATES VOLATILITY TRADE MODELS |
| Kieli: | eng |
| Tiivistelmä: | A puzzle in empirical international finance is the difficulty in finding a large and negative effect of exchange rate volatility on international trade. A common explanation is the availability of hedging instruments. In the paper, the empirical validity of this explanation is examined using data on over 1000 country pairs. This paper deals with the problem by specifying an endogenous regime-switching regression. There are two main findings. First, there is no evidence in the data to support the validity of the hedging hypothesis. Second, for country pairs with large trade potential, exchange rate volatility deters goods trade to an extent much larger than that typically has been documented in the literature. |
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