Marshall-Lerner Condition and the Balance of Payments Constrained Growth: The Spanish Case
Luis Sastre ()
Additional contact information
Luis Sastre: Departamento de Teor¨ªa Econ¨®mica y Econom¨ªa Matem¨¢tica, UNED, SPAIN
Review of Economics & Finance, 2018, vol. 13, 29-38
This paper develops an analytical reformulation of the Marshall-Lerner condition. This reformation of the Marshall-Lerner condition leads us to reformulate both the Thirwal¡äs model and the Krugman¡äs rule in open economies, under the following terms: in the long run, if the MarshallLerner condition is maintained, the balance of payments constrained growth income not only depends on export and import income elasticities, but also on the cross-elasticity values between exports and imports. The analytical development has a series of implications for empirical studies about the Foreign Sector: export and import functions must be estimated considering the possibility of high cross correlations between them in the modelled countries. In the case of Spain, the longterm estimations of the price elasticities of exports and imports, and the respective cross elasticities, lead us to conclude that currency devaluation would, in the long term, improve the balance of trade and increase the constrained growth income in relation with the strong version of Thirwall¡äs law.
Keywords: Marshall-Lerner condition; Export and import flow simultaneity; Price-elasticity; Cross- elasticity (search for similar items in EconPapers)
JEL-codes: F41 F44 F30 F11 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bap:journl:180303
Ordering information: This journal article can be ordered from
17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada
Access Statistics for this article
Review of Economics & Finance is currently edited by H. Carlson
More articles in Review of Economics & Finance from Better Advances Press, Canada 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada.
Bibliographic data for series maintained by Carlson ().