ADAKAH FENOMENA MARSHALL-LERNER CONDITION DAN J-CURVE DI INDONESIA

Abstract

Openness of the economy has an impact on the economy's balance of payments. Country with an open economy will face
problems of balance, namely the balance of internal and external balance. External balance of a country can be affected
by exchange rate policy that aimed at maintaining the balance of payments. Therefore, in setting the policy direction of the
exchange rate, a country will prioritize the efforts to maintain the competitiveness of exports and reduce imports to reduce
the current account deficit. In several studies in different countries there are empirical findings that currency depreciation
will improve the balance of payments of the country. This is due to the depreciation would likely spur exports as prices of
exported goods more competitive. This condition is often called the Marshall-Lerner Condition. If the Marshall-Lerner
condition is filled there will be a change in the improvement direction in the balance of payments that is called the J curve.
This paper demonstrates the phenomenon of the Marshall-Lerner condition and the J curve in Indonesia as in many
countries based on research that has been done.
Keywords : External balance, balance of payments, elasticity approach, the Marshall-Lerner Condition, J curve.