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...

This paper presents a model of a competitive risk averse exporting firm under exchange rate uncertainty. If forward market contracts are available neither the distribution parameters of the exchange rate nor the degree of the firm's risk aversion have any impact on the export level. But this...