earticle

영어

For a fluctuation in the exchange rate to cause a change in the trade balance, exports and imports must respond sufficiently. The sum of the exchange rate elasticity of exports and the exchange rate elasticity of imports must have a magnitude of at least one, i.e., the Marshall-Lerner-Robinson condition must be satisfied. In this study, we decompose exchange rate into depreciation and appreciation and analyze whether the MLR condition is satisfied in each case using cointegration, DOLS and FMOLS. In the case of Korea, both exports and imports respond to exchange rate depreciation, but not to exchange rate appreciation. This results suggests that exchange rate have asymmetric effects on the trade balance.