Which effects does the Marshall-Lerner condition not take into consideration (e.g.)?
Before the introduction of the Euro, Germany had increasing net exports for many years although the currency (D-Mark) was appreciating - in contrast to the Marshall-Lerner conditions.
- OiyLv 61 month ago
The German Bundesbank has estimated that the total demand for the German export products is inelastic. People will buy more products, such as Mercedes Benz, BMW, Porsche or even Nivia when the prices are high. So the appreciation of the D mark has brought in the trade surplus instead.