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 J‐curve dynamics of Turkish bilateral trade: A cointegration approach – www.emerald.com [PDF]
- The J-curve: a literature review – www.tandfonline.com [PDF]
- New Zealand's trade balance: evidence of the J-curve and granger causality – www.tandfonline.com [PDF]
- The J-curve: evidence from East Asia – www.jstor.org [PDF]
- The bilateral J-curve: Turkey versus her 13 trading partners – www.sciencedirect.com [PDF]
- Bilateral J-curve between the UK vis-à-vis her major trading partners – www.tandfonline.com [PDF]
- A disaggregated approach to test the J-curve phenomenon: Japan versus her major trading partners – link.springer.com [PDF]
