NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade and Exposure

Kathryn M.E. Dominguez, Linda L. Tesar

NBER Working Paper No. 8129
Issued in February 2001
NBER Program(s):   IFM

Are firms that engage in trade more vulnerable to exchange rate risk? Or, put another way, that exchange rate movements will influence firm asset value through the trade channel. In this paper we examine the relationship between exchange rate movements, firm value and trade. Our empirical work tests whether exchange rate exposure can be explained by variables that proxy for the level of international activity, firm size, industry affiliation and country affiliation. The results suggest that while a significant fraction of firms in these countries is exposed to exchange rate movements, there is little evidence of a systematic link between exposure and trade. Indeed, what little evidence there is of a link suggests that firms that engage in greater trade exhibit lower degrees of exposure. This may reflect the fact that those firms most engaged in trade are also the most aware of exchange rate risk, and therefore are the most likely to hedge their exposure.

download in pdf format
   (61 K)

email paper

This paper is available as PDF (61 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8129

Published: "Trade and Exposure",American Economic Review, Vol. 91, No. 2, Papers and Proceedings, pp.367-370, May 2001

Users who downloaded this paper also downloaded these:
Dominguez and Tesar w8128 A Re-Examination of Exchange Rate Exposure
Dominguez and Tesar w8453 Exchange Rate Exposure
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us