Bickerdike-Robinson-Metzler Condition



  • In the elasticities approach to analyzing effects of exchange rates, the condition for a depreciation to have a positive effect on the trade balance: [?X ?M (1 + eX + eM) – eX eM (1 – ?X – ?M)] / [(eX + ?X)(eM + ?M)] > 0, where eI (?I) is the supply (demand) elasticity of I=X,M exports and imports respectively. If supply elasticities are infinite, it reduces to the Marshall-Lerner Condition. Due to Bickerdike (1920), Robinson (1947), and Metzler (1948).