This paper studies the applicability of the Marshall-Lerner condition to the "basic" Obstfeld and Rogoff (1995) model. It shows that the Marshall-Lerner condition does apply to this class of models with homothetic preferences when product differentiation across countries is imposed. This paper...

This paper studies the applicability of the Marshall-Lerner condition to the “basic” Obstfeld and Rogoff (1995) model. It shows that the Marshall-Lerner condition does apply to this class of models with homothetic preferences when product differentiation across countries is imposed. This...

This paper shows that, by disentangling the degree of monopolistic distortion from the elasticity of substitution between domestic and im-ported goods, we can obtain a negative response of the trade balance to positive monetary shocks, without introducing capital accumula-tion. This result could...