EXPORT AND HEDGING DECISIONS UNDER REVENUE AND EXCHANGE-RATE RISK - ANOTE

This note analyzes optimal export and hedging decisions taken by a ris k-averse exporting firm which simultaneously faces hedgeable exchange rate risk and non-hedgeable revenue risk abroad. The separation proper ty does not hold, exports depend on preferences and expectations. Reve nue uncertainty causes the firm to export less. The optimal currency f orward position can be divided into three components: an expected reve nue component, a speculative component and a revenue uncertainty compo nent. (C) 1997 Elsevier Science B.V.