J curve
Definition. The J curve describes how a country trade balance typically worsens before it improves following a currency depreciation. In the short run, demand for imports and exports is price inelastic, so the higher cost of imports outweighs any rise in export volumes, and only later does the balance improve.
The J curve reflects the Marshall Lerner condition holding only over time. As demand becomes more price elastic in the long run, export and import volumes adjust enough for the trade balance to recover and then improve.
This term belongs to The Marshall Lerner Condition in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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