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. Investopedia Says:
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. Related Terms:
Balance of Payments
Balance of Trade
Deficit
Economics
Export
Import
Trade |