Long-run price elasticities and the Marshall–Lerner condition revisited

Bahmani‐Oskooee, Mohsen; Niroomand, Farhang

doi:10.1016/s0165-1765(98)00147-5

Cited by 168 publications

(51 citation statements)

References 19 publications

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“…Another study by [19] used the Johansen & Juselius ML co-integration methodology (1990) to calculate the MarshallLerner condition used for the 06 nations by applying the data covering the 1973Q1-1990Q4 periods. The findings show that the Marshall-Lerner condition was not satisfied for Pakistan because this finding was based on the aggregate trade data.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The findings prove that the Marshall-Lerner condition in the long run for Pakistan is fulfilled now. In fact, the method they used is a development over the [19] but it may perhaps still experience from aggregation bias because for each entity trading partner the bilateral trade data were not applied. [25] have found no cause of the devaluation of dollar on the trade balance involving USA & her six trading followers in the short as well as in the long period.…”

Section: Literature Reviewmentioning

confidence: 99%

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Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners

Khalid¹

2017

EBM

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Abstract:The earlier researches investigated the J-curve hypothesis along with the Marshall-Lerner condition in Pakistan used the OLS, 2SLS, 3SLS, and Instrumental Variables (IV) techniques. The estimates obtained from these studies may suffer from spurious regression problems as the models were estimated without incorporating the co-integrating property of the variables. Hence, the objective of this work is to analyze the trade balance model using relatively the new co-integration approach, the ARDL model. The J-curve phenomenon is tested for Pakistan's trade with her selected South Asian trade partners, including Republic of India and Democratic Socialist Republic of Sri Lanka using the annual time series data over the 1975-2013 periods. After empirical analysis, it was observed that the J-curve occurrence is rejected in favor of Pakistan with its trading partners. This study concludes that depreciation of Pakistani Rupee has a constructive result on Pakistan's trade with these trade partners.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners

Khalid¹

2017

EBM

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“…This study is based on the export and import functions which were used in the 'Long-Run Price Elasticities and the Marshall-Lerner Condition revisited' study of Mohsen Bahmani-Oskooee andFarhang Niroomand in 1998 (Bahmani-Oskooee andNiroomand, 1998: 102). According to this model; Import demand function:…”

Section: The Elasticity Approach and The Marshall-lerner Conditionmentioning

confidence: 99%

International Trade Driven Growth Patterns in India, Pakistan, and Sri Lanka (1985 - 2015) : An Empirical Study

Tripti

Bandyopadhyay

2017

Indian Journal of Finance

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Exchange rates are important macroeconomic policy variables. In formulating exchange rate policies, one of the major concerns of the policy makers is the responsiveness of trade flows to relative price changes. The Marshall -Lerner condition shows that if absolute value of price elasticity of export and import demand is greater than unity, devaluation will improve trade balance. Using the Johansen and Johansen and Juselius Cointegration method we test the Marshall -Lerner condition for Bangladesh for the period 1985-2014. Estimated results show that Marshall -Lerner condition holds for Bangladesh in the long run. Export is current export price inelastic which is consistent with earlier studies. Export is also lag export price inelastic. To get the benefit of currency devaluation, export demand might be made price elastic by increasing the export base, including new products in the export basket, maintaining quality, searching new markets for exports, improving infrastructure facilities for smooth production and supply of exports.

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“…As will be noted later, this is an area for further analysis. Bahmani-Oskooee and Niroomand, 1998;Senhadji, 1997;Gumede, 2000), the effect of protection is indirectly captured through the import price which is inclusive of tariffs. Estimated aggregate import price elasticities range from -0.53 (Bahmani-Oskooee and Niroomand, 1998) to -1.04 (Senhadji, 1997), exports as a share of gross output and various indicators of tariff protection.…”

Section: Anti-export Biasmentioning

confidence: 99%