Marshall-Lerner Condition is Wrong

6 Pages Posted: 21 Oct 2012 Last revised: 8 Jul 2018

See all articles by Hak Choi

Hak Choi

Chienkuo Technology University - Department of International Business; Chung-Hua Institution for Economic Research

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

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

Hak Choi (Contact Author)

Chienkuo Technology University - Department of International Business ( email )

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Chung-Hua Institution for Economic Research ( email )

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Taipei
Taiwan

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