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Yes Demand for imports (before $-devaluation) Demand for imports (after $-devaluation) Price of imports, in foreign currency (before $-devaluation) USA Japan 400 600 200
Yes Demand for imports (before $-devaluation) Demand for imports (after $-devaluation) Price of imports, in foreign currency (before $-devaluation) USA Japan 400 600 200 800 10 100 Suppose the $ is devalued: we go from Yen = $1/100 to Yen = $1/10. Does the Marshal-Lerner condition hold in this example? No
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