@booklet {62251,
	title = {Risk and Exchange Rates},
	year = {2001},
	note = {Download PDF},
	month = {Feb 15, 2001},
	abstract = {This paper develops an explicitly stochastic new open economy macroeconomics{\textquoteright} model, which can potentially be used to explore the qualitative and quantitative welfare differences between alternative exchange rate regimes. A crucial feature is that we do not simplify by assuming certainty equivalence for producer price setting behavior. Our framework also provides a sticky{\textendash}price alternative to Lucas{\textquoteright}s (1982) exchage rate risk premium model. We show that the level risk premium{\textquoteright} in the exchage rate is potentially quite large and may be an important missing fundamental in empirical exchange rate equations. As a byproduct analysis also suggests an intriguing possible explanation of the forward premium puzzle.},
	author = {Rogoff, Kenneth S.}
}
