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.


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.

  1. Deficit

    The amount by which a resource falls short of a mark, most often ...
  2. Balance Of Payments (BOP)

    A record of all transactions made between one particular country ...
  3. Export

    A function of international trade whereby goods produced in one ...
  4. Import

    A good or service brought into one country from another. Along ...
  5. Trade

    A basic economic concept that involves multiple parties participating ...
  6. Economics

    A social science that studies how individuals, governments, firms ...
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