The J curve method is an economic theory that illustrates how a country's trade deficit initially worsens after currency devaluation, due to higher import prices and a lag in export volume growth. Over time, as export volumes increase and imports adjust, the trade balance improves, forming a characteristic J shape when charted.
6 answers
Chiara
Tue Dec 17 2024
The J Curve represents an intriguing economic theory.
ShintoMystic
Mon Dec 16 2024
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SamuraiWarriorSoulful
Mon Dec 16 2024
It suggests that a trade deficit may initially deteriorate following currency depreciation.
ethan_thompson_journalist
Mon Dec 16 2024
This occurs because the nominal trade deficit expands in the immediate aftermath of currency devaluation.
Lucia
Mon Dec 16 2024
The reason behind this expansion is the increase in export prices.