The denominator is positive, and the numerator is positive or negative. Thus, a monetary expansion, in the short run, does not necessarily improve the trade balance. This result is not compatible with what the Mundell-Fleming predicts. This is a consequence of introducing exchange rate expectations which the MF theory ignores. Nevertheless, Dornbusch concludes that monetary policy is still effective even if it worsens a trade balance, because a monetary expansion pushes down interest rates and encourages spending. He adds that, in the short run, fiscal policy works because it raises interest rates and the velocity of money.