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We present a model of a risk-averse exporting firm subject to exchange rate risk. The firm enters an unbiased currency futures market to hedge its exchange rate risk exposure. In the real world there are other ways of evading uncertainty, the most common are holding of inventories. We...
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investment (FDI). While there are many reasons for firms to go multinational and probably just as many for Germany's high … labour is abundant. Thus, although Germany's high labour costs are not the sole driver of foreign direct investment, they may …
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