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
Date Written: June 1, 2012
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: Suggested Citation