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The main aim of this paper was to find out the volatility of MEX/USD exchange rate effecting the trade balance between these countries. This research analyzed the changes in United States GDP, Mexican GDP and real exchange rate between 1994-2016, which were affecting trade balance between those countries. Methods which were used in this paper are elasticity approach and absorption model and the literature which was found has rational linkage to the overpaid assumptions.
The outcomes of methodology was positive including the elasticity approach and absorption model, showing the relationship between above mentioned variables and trade balance. The relationship between United States and Mexican trade balance occurred to be negative. The increasing Mexican production causes trade balance to move more to surplus than the USA production does. The increase in the value of US dollar impacts the trade balance  between USA and Mexico negatively in the following period of time.
In this research the Marshall-Lerner condition was revealed for the United States variable and refutes the including of interest rate or fiscal policy and monetary policy as an output level. Although, the Marshall-Lerner Condition for Mexican variable haven’t brake. Which means that the depreciation of USD would have a positive affect on the trade balance deficit.

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However, it is self-evident that the depreciation of the USD will have an effect on more economies than the economies of United States and Mexico. On the closer investigation on a trade balance between those two countries through the period of 1994-2016 the volatility of MEX/USD affected the trade balance deficit occurrence for the United States variable.
This study might be helpful for determination of the trade balance condition between given countries in order to find out the fluctuation of real exchange rate of same given countries and try to predict the possible outcomes with acceptable errors.