Re-Examination of the Marshall-Lerner Condition in Peru at a Disagregated Level: An Analysis in the Unbalanced Panel

20 Pages Posted: 29 Oct 2012 Last revised: 5 Oct 2014

See all articles by Jose Nolazco

Jose Nolazco

University of Chile - Department of Economics

Date Written: June 1, 2012

Abstract

The research proposes a new theoretical model and re-evaluates the Marshall-Lerner condition at the level of disaggregation of a digit according to the Standard International Trade Classification (SITC) for exports and imports from Peru using unbalanced panel data for the period 1980-2010. Using a panel SUR (Seemingly Unrelated Regression) show that the Marshall-Lerner condition is fulfilled only for sectors 1 (beverages and tobacco) and 7 (machinery and transport equipment). Therefore sectors 0 (food and live animals), 2 (crude materials, inedible, except fuels) 3 (mineral fuels, lubricants), 4 (animal and vegetable oils, fats), 5 (chemicals) and 6 (manufactured goods ) are not sensitive to before a depreciation of the exchange rate and therefore in the long run does not improve the trade balance for these sectors.

Keywords: Marshall-Lerner condition, exports, imports, long-term elasticities, panel SUR

JEL Classification: E5, E6, F41

Suggested Citation

Nolazco, Jose, Re-Examination of the Marshall-Lerner Condition in Peru at a Disagregated Level: An Analysis in the Unbalanced Panel (June 1, 2012). Available at SSRN: https://ssrn.com/abstract=2167989 or http://dx.doi.org/10.2139/ssrn.2167989

Jose Nolazco (Contact Author)

University of Chile - Department of Economics ( email )

Diagonal Paraguay 257
Torre 26, Of. 1801
Santiago
Chile

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