BROWSE

J Curve

What is 'J Curve'

A theory stating that a country's trade deficit will worsen initially after the depreciation of its currency because higher prices on foreign imports will be greater than the reduced volume of imports.

Explaining 'J Curve'

The effects of the change in the price of exports compared to imports will eventually induce an expansion of exports and a cut in imports--which, in turn, will improve the balance of payments.


Further Reading


The J-curve in the emerging economies of Eastern Europe
www.tandfonline.com [PDF]
… The results have important implications for policymakers involved in economics in terms of using exchange … deterioration combined with long-run improvement, we find support for the J-curve hypothesis only … case of Turkey, which may be driven by a series of financial crises that …

The J‐curve dynamics of Turkish bilateral trade: A cointegration approachThe J‐curve dynamics of Turkish bilateral trade: A cointegration approach
www.emerald.com [PDF]
… The results have important implications for policymakers involved in economics in terms of using exchange … deterioration combined with long-run improvement, we find support for the J-curve hypothesis only … case of Turkey, which may be driven by a series of financial crises that …

The J-curve: a literature reviewThe J-curve: a literature review
www.tandfonline.com [PDF]
… The results have important implications for policymakers involved in economics in terms of using exchange … deterioration combined with long-run improvement, we find support for the J-curve hypothesis only … case of Turkey, which may be driven by a series of financial crises that …

New Zealand's trade balance: evidence of the J-curve and granger causalityNew Zealand's trade balance: evidence of the J-curve and granger causality
www.tandfonline.com [PDF]
… The results have important implications for policymakers involved in economics in terms of using exchange … deterioration combined with long-run improvement, we find support for the J-curve hypothesis only … case of Turkey, which may be driven by a series of financial crises that …

The J-curve: evidence from East AsiaThe J-curve: evidence from East Asia
www.jstor.org [PDF]
… The results have important implications for policymakers involved in economics in terms of using exchange … deterioration combined with long-run improvement, we find support for the J-curve hypothesis only … case of Turkey, which may be driven by a series of financial crises that …

The bilateral J-curve: Turkey versus her 13 trading partnersThe bilateral J-curve: Turkey versus her 13 trading partners
www.sciencedirect.com [PDF]
… The results have important implications for policymakers involved in economics in terms of using exchange … deterioration combined with long-run improvement, we find support for the J-curve hypothesis only … case of Turkey, which may be driven by a series of financial crises that …

Bilateral J-curve between the UK vis-à-vis her major trading partnersBilateral J-curve between the UK vis-à-vis her major trading partners
www.tandfonline.com [PDF]
… The results have important implications for policymakers involved in economics in terms of using exchange … deterioration combined with long-run improvement, we find support for the J-curve hypothesis only … case of Turkey, which may be driven by a series of financial crises that …

A disaggregated approach to test the J-curve phenomenon: Japan versus her major trading partnersA disaggregated approach to test the J-curve phenomenon: Japan versus her major trading partners
link.springer.com [PDF]
… The results have important implications for policymakers involved in economics in terms of using exchange … deterioration combined with long-run improvement, we find support for the J-curve hypothesis only … case of Turkey, which may be driven by a series of financial crises that …



Q&A About J Curve


What does J curve state about a country's trade deficit?

The J curve states that a country's trade deficit will worsen initially after the depreciation of its currency because higher prices on foreign imports will be greater than the reduced volume of imports.

What is J Curve?

A theory stating that a country's trade deficit will worsen initially after the depreciation of its currency because higher prices on foreign imports will be greater than the reduced volume of imports.

How long does it take for this to occur?

It takes time for this to occur.

When does this change happen?

Eventually, an expansion of exports and reduction in imports improve balance of payments.

Why do you think this happens?

This happens because people are more likely to buy domestic goods when they cost less in their own currency and import goods when they cost more in their own currency.