马歇尔勒纳条件和J曲线效应推导.pptVIP

Primary question: Under what circumstances does devaluation improve the trade balance (TB)? Secondary question: If the currency floats (i.e., no foreign exchange intervention by the central bank), how much must the exchange rate (E) change to clear TB by itself (i.e., with no offsetting capital flows)? Model: Elasticities ApproachKey derivation: Marshall-Lerner Condition GOODS MARKET PRICING IN OPEN-ECONOMY MODELS: ALTERNATIVE ASSUMPTIONS GOODS MARKET PRICING IN OPEN-ECONOMY MODELS: ALTERNATIVE ASSUMPTIONS (continued) GOODS MARKET PRICING IN OPEN-ECONOMY MODELS: ALTERNATIVE ASSUMPTIONS (continued) The Marshall-Lerner Condition:Under what conditionsdoes devaluation improve the trade balance? We can express the trade balance either in terms of foreign currency: TB*, e.g., if we are interested in determining the net supply of foreign exchange in the fx market (balance of payments) Or in terms of domestic currency: TB e.g., if we are interested in net exports as a component of GDP ≡ C+I+G+(TB). We will focus on TB* here, and on TB in Prob. Set 1. How the Exchange Rate, E, Influences BoP Derivation of the Marshall-Lerner Condition TB* = (1/E) XD(E) – MD(E) Differentiate: Multiply by E2/X. This quantity 0 iff Define elasticities: The condition becomes: . Assume for simplicity we start from an initial position of balanced trade: EM=X. Then the inequality reduces to  This is the Marshall Lerner condition. If the initial position is trade deficit (or surplus) , then the necessary condition for dTB*/dE 0 will bea bit easier (or harder) for the elasticities to meet . Do devaluations improve the trade balance in practice? Historical example The J-curve Econometric estimation of elasticities (in Lecture 2) * LECTURE 1: DEVALUATION  THE TRADE BALANCE ASSUMPTIONS :