Exchange Rate Variability and Asset Trade
1987 (English)Report (Other academic)
In popular discussion about the merits of different international monetary arrangements it is often maintained that increased exchange rate variability has a negative influence on international trade and foreign investment. This paper addresses a specific, but also a very basic, aspect of this general issue, namely the effect of exchange rate variability on capital flows and international portfolio diversification. More precisely, we examine how different monetary policies - and among those, policies that aim at stabilizing exchange rate - determine the risk characteristics of nominal assets, and how these risk characteristics in turn affect international portfolio composition and trade in assets, when international asset markets are incomplete.
Place, publisher, year, edition, pages
Stockholm: IIES , 1987. , 38 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 394
Exchange rate risk, asset trade, international portfolio diversification
IdentifiersURN: urn:nbn:se:su:diva-41574OAI: oai:DiVA.org:su-41574DiVA: diva2:331210