Explanation of the elasticity, absorption, and multiplier theories of balance of payments adjustment?

Explanation of the Elasticity Theory of Balance of Payments Adjustment, Absorption Theory, and Multiplier Theory:The Elasticity Theory, Absorption Theory, and Currency Theory all analyze the economic effects of currency devaluation. The exchange rate is an important variable in a country's economy, and its movements have wide-ranging effects not only on the balance of trade but also on the domestic economy.

Because the three theories have different assumptions, theoretical foundations, and basic views, their analysis of currency devaluation also has its own characteristics. From the three theoretical assumptions, viewpoints, we specifically compare their discussion of the devaluation effect.

The theory of elasticity analysis is a balance of payments theory applicable to the paper currency circulation system, which focuses on the conditions for the success of currency devaluation and its impact on the balance of trade and terms of trade. The theory discards the import and export of labor and international capital flows, and the balance of trade is equated with the balance of payments, while assuming an infinite elasticity of supply of imported and exported goods.

Then, according to the absorption theory, it can be seen

The difference in the balance of payments depends on the level of total income, the size of the marginal propensity to absorb and the level of domestic spontaneous absorption. Because of the domestic spontaneous absorption is more difficult to adjust, so the absorption theory advocates the balance of payments adjustment path is to change the total income and marginal absorption tendency, that is, the implementation of expenditure conversion policy and expenditure increase and decrease policy, with expenditure increase and decrease policy to adjust the total income, with expenditure conversion policy to change the marginal absorption tendency, so as to change the total absorption, and ultimately to achieve the total income and the total absorption of the total equals to realize the balance of payments balance.