| 单词 | Marshall-Lerner condition |
| 释义 | Marshall-Lerner condition A condition for devaluation to improve a country's balance of trade. Suppose that trade between two countries is initially balanced, and that country 1 devalues by a small proportion k. If exports are in perfectly elastic supply in each country, domestic price and income levels do not change, and the price elasticity of demand for imports is a in country 1 and b in country 2, the balance of trade changes as follows. In terms of country 1's currency, 1's import prices rise by k, and the quantity imported falls by αk; spending on imports rises by (1-α)k. Export prices stay the same in 1's currency, but in 2's they fall by k, so quantity sold rises by βk. The balance of trade thus improves by (α+β-1)k times the initial level of trade; this is positive if α + β > 1. In terms of country 2's currency, A's import spending falls by αk, and export receipts rise by (β-1)k, so again the balance of trade improves by (α+β-1)k times initial trade, as before. The Marshall-Lerner condition clearly needs several qualifications: it is only an approximation for large k; countries do not generally devalue when their trade is initially balanced; and it takes no account of imported inflation in the devaluing country, nor of the multiplier effects on income of an improved trade balance. However, the general point it makes is valid: devaluation is likely to be most effective in improving the trade balance if the demand elasticities are large in both countries, and will not be very helpful if α + β is close to 1. |
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