Marshall-Lerner condition

• What does the Marshall-Lerner condition state about the sum of the price elasticities of imports and exports?

  It must be more than one (i.e. elastic).
• Why is the Marshall-Lerner condition important for currency devaluation?

  It determines if a currency devaluation will positively impact the trade balance.
• What is the relationship between currency devaluation and the trade balance according to the Marshall-Lerner condition?

  A positive impact on the trade balance occurs only if the sum of elasticities is more than one.