using transactions data. We propose a new market microstructure theory which we call derivative hedge theory, in which … volume as a measure of liquidity and supports the derivative hedge theory. Option market spreads are positively related to … spreads in the underlying market, again supporting our theory. However, option market duration does affect option market …

risks. Portfolios hedging macro uncertainty have historically earned zero or even significantly positive returns, while …

We study the implications of hedging for firm financing and investment. We do so using an extensive, hand …-collected dataset on corporate hedging activities. Hedging can lower the odds of negative firm realizations, reducing the expected costs … of financial distress. In theory, this should ease a firm's access to credit. Using a tax-based instrumental variable …

This paper uses a dynamic optimization model to estimate the welfare gains of hedging against commodity price risk for … commodity-exporting countries. We show that the introduction of hedging instruments such as futures and options enhances …

We identify a novel, fiscal hedging motive that helps to explain why governments issue more expensive, long-term debt …

question we address in the paper is how should a country react to these fluctuations. Depending on the hedging possibilities … the country faces, the options range from pure self-insurance to hedging the sudden stop jump itself. In between, there is …