Marshall-Lerner Condition is Wrong
6 Pages Posted: 21 Oct 2012 Last revised: 8 Jul 2018
Date Written: October 20, 2012
Abstract
Many countries found puzzling when devaluation cannot improve their trade account. This paper proves that the theory they rely on is wrong. Depreciation is always harmful, for it reduces imports, exports, and trade profit. The Marshall-Lerner condition, if any, is always equal to one, and has no particular economic meaning.
Keywords: Trade, Exchange Rate, Devaluation
JEL Classification: F13, F31, F32
Suggested Citation: Suggested Citation
Choi, Hak, Marshall-Lerner Condition is Wrong (October 20, 2012). Available at SSRN: https://ssrn.com/abstract=2164629 or http://dx.doi.org/10.2139/ssrn.2164629
Do you have negative results from your research you’d like to share?
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.