"4.3 Sri Lanka’s Marshall-Lerner ConditionTable 11: Stationary Testing in Sri Lanka (1985-2013)VariableTest Statistic5% critical ValueResultExchange Rate1.633.41Stationary Sri Lanka Domestic Income3.493.41StationaryWorld Income3.463.41StationaryExports from Sri Lanka2.783.41StationaryImports to Sri Lanka1.833.41Stationary Source: Author’s own calculations from Appendix 3 using Unit root Test via SASTable 10: Cointegration for Sri Lanka (1985-2913)ModelVariablesValue5% critical valueResult Exports, Exchange Rate, Exports Equation-5.74-3.34No Cointegration World Income Imports EquationImports, Exchange Rate,-5.63-3.34No Cointegration Domestic Income Source: Author’s own calculations from Appendix 3 using Augmented-Dickey Fuller Test via SASTable 11: Export Equation of Sri Lanka (1985-2015) Regression StatisticsMultiple R 0.12666988R Square 0.016045259Adjusted R Square -0.059643568Standard Error 0.083640338Observations 29Coefficients Standard Error t Stat P-valueIntercept 2.22543741 1.287337781 1.728713 0.095720.104884507 0.244973296 0.428147 0.67207Log Exchange Rate-0.151976356 0.274867948 -0.55291 0.58505Log world IncomeSource: Author’s own calculations from Appendix 3 Hence, we can write the following equations using the result in Table 11: ? log X = B1 + B2 log WI + B3log ER + a1? Log X = 2.22 -0.15 WI + 0.104 ER? World Income Elasticity = 1/ 0.15 = 6.66? Export Elasticity = 1/ 0.104 = 9.61Discussion Of Table 11:i. As multiple regressions is 0.12. So, it indicates that there is almost no correlation between thedependent (Export) and independent variables (World Income and Exchange rate).2ii. R is 0.01 therefore 1 % of the variation in Exports is explained by the World Income and theExchange rate. iii. A 1% appreciation in the Real Exchange rate causes the exports (as a percentage of GDP) todecrease by 9.61%.iv. A 1% increase in the World Income causes 6.66 % decline in the exports.Table 12: Import Equation of Sri Lanka (1985-2015)Regression Statistics0.639902308Multiple R0.409474964R SquareAdjusted R Square 0.364049961Standard Error 0.043657715Observations 29Coefficients Standard Error t Stat P-valueIntercept 1.943065634 0.098633447 19.69987 3.77E-17Log GNI -0.324103649 0.077521761 -4.18081 0.000291Log Exchange Rate 0.335894904 0.094672375 3.547972 0.001501Source: Author’s own calculations from Appendix 3 Hence, we can write the following equations using the result in Table 12:? log Y = B1 + B2 log GNI + B3log ER + a1? Log Y = 1.94- 0.32 GNI + 0.33 ER? Domestic Income Elasticity = 1/ 0.32= 3.125? Import elasticity= 1/ 0.33= 3.030 "