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The condition that the sum of the elasticities of demand for exports and imports exceed one (in absolute value); that is, hX + hM > 1, where hX, hM are the demand elasticities for a country's exports and imports respectively. Assuming the current account balance = 0 and supply elasticities are inifinte (necessary but not sufficient) this is the condition for a depreciation to improve the trade balance

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16y ago

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