TESTING MARSHALL-LERNER CONDITION:
A NON-PARAMETRIC APPROACH

Eray M. YÜCEL (Bilkent University)
Syed F. MAHMUD (Bilkent University)
Aman ULLAH (University of California)

In this study, non-parametric kernel estimation technique has been employed to estimate import and export price elasticities for six developed countries. Based on the estimates of these elasticities, Marshall-Lerner Condition has been examined. In general the condition is only partially satisfied in the sub-sample periods. The results also suggest that the condition is more likely to be satisfied under fixed exchange rate regime.