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Cointegration Approach to Estimate the Long-Run Trade Elasticities in LDCs

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  • Mohsen Bahmani-Oskooee

Abstract

The Marshall-Lerner condition postulates that if the sum of import and export demand elasticities add up to more than one, devaluation should improve the trade balance in the long-run. This paper is the first to employ a long-run method, i.e., cointegration technique to estimate trade elasticities in less develop countries. In most cases the results reveal that indeed trade elasticities are large enough to support devaluation as a successful policy to improve the trade balance. [F10, F31]

Suggested Citation

  • Mohsen Bahmani-Oskooee, 1998. "Cointegration Approach to Estimate the Long-Run Trade Elasticities in LDCs," International Economic Journal, Taylor & Francis Journals, vol. 12(3), pages 89-96.
    • Handle: RePEc:taf:intecj:v:12:y:1998:i:3:p:89-96
    DOI: 10.1080/10168739800000031
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    References listed on IDEAS

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