This article has two goals. The first is to contrast two widely used definitions of risk aversion. The second is to establish the feasibility of plunging behavior, in the sense that a possibly large number of risk averse investors will not be diversifiers.

[1] Adler, F. M., The Relationship between the and Price Elasticities of Demand for United States Exports, this REVIEW, LII (Aug. 1970), pp. 313-319. [2] Banca D'Italia, Elasticita di domanda e di prezzo nel cominercio estero dei principali paesi industriali, Rome, 1970. Salvatore Leonetti is the author. An abridged version appeared in the Bank of Italy's Bolletino, XXV (Jan.-Feb. 1970). [3] Houthakker, H. S. and S. P. Magee, Income and Price Elasticities in World Trade, this REVIEW, LI (May 1969), pp. 111-125. [4] Office of Statistics and Reports, Agency for International Development, Gross National Product: Growth Rates and Trend Data by Region and by Country (April 30, 1970), RC-W-138.

R ECENT empirical studies in international trade, by Junz and Rhomberg [10], Kreinin [14] and in a major contribution, by Houthakker and Magee [6], have stressed the importance of different price and income elasticities of demand for exports and imports among countries as determinants of trade patterns. However, questions as to why such differences in elasticities arise remain open. An important component of the problem is whether the price and income elasticities of demand for individual exporters' products vary systematically across customer markets. This paper attempts partially to address the latter issue by examining the elasticities of United States exports of manufactured goods. The major finding is that a relationship exists between the competitiveness of United States manufactured goods exports in various foreign countries and the nature of the customer market. The result has implications, outlined below, for projections of future United States trade balances.

This paper identifies five universal currency hedge ratio (UHR) definitions. These are hedge positions in foreign bonds, stated as a fraction of national or global equity portfolios, that are the same for all investors, regardless of nationality. The first three involve the total demand for foreign bonds and depend on equities not being held for hedging purposes. The last two are associated with variance-minimizing regression hedges. These hold, in general, but are designed exclusively for hedging other traded asset positions. Jensen's inequality makes the choice of measurement currency irrelevant and makes the HRs universal without affecting their values.

ABSTRACT This paper demonstrates that deviations from purchasing power parity reveal a remarkable and possibly startling consistency with martingale behavior during both fixed and flexible rate periods, for a wide variety of countries, and in both monthly and annual data. Since this pattern appears to be much more general than one would expect on the basis of models founded on international commodity arbitrage, the paper proposes an alternative explanation which instead relies on financial arbitrage in bonds as the underlying mechanism.