Marshall-Lerner Condition is Wrong

descriptionPublicationkeyboard_double_arrow_right Article , Other literature type 01 Jan 2012 English Publisher:Elsevier BVJournal:SSRN Electronic Journal (eissn: 1556-5068,

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Authors: Hak Choi;

doi: 10.2139/ssrn.2164629

Marshall-Lerner Condition is Wrong

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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.

Related Organizations

Chienkuo Technology University
Taiwan
Chung-Hua Institution for Economic Research
Taiwan

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