What is the J-curve theory?
The J Curve is an economic theory that says the trade deficit will initially worsen after currency depreciation. The nominal trade deficit initially grows after a devaluation, as prices of exports rise before quantities can adjust.
What is J-curve phenomena?
In cardiovascular (CV) medicine, the J-curve phenomenon arises when a risk factor becomes inversely related to risk below a certain point, whereas the more widely accepted positive risk association exists across most of the observed risk factor distribution.
What is J-curve effect of Marshall Lerner?
The effect of currency depreciation on the trade deficit depends on price elasticity of demand for exports & imports. The J Curve effect says a trade deficit can worsen after depreciation, but improve if the Marshall-Lerner condition holds.
When did the J-curve start?
The J-Curve effect was first observed in 1973 by Stephen Magee when the U.S. trade balance deteriorated in 1972 despite devaluation of the dollar in 1971. One question researchers have raised is how long it takes for the trade balance to experience an improvement after devaluation.
How do you mitigate J-curve?
However, there are three ways to smooth out the J-curve, potentially reducing and/or shortening this period for investors:
- Invest in a company that charges fees on invested capital, rather than committed capital.
- Invest in a company that seeks to acquire durable and growing businesses, rather than those in distress.
What does the J-curve represent about population growth?
J curve can be defined as the j shaped growth curve that graphically represents a situation in a new environment where the population density of an organism increases at an exponential rate.
What causes the J curve effect How does the J curve effect relate to the time path of currency depreciation or devaluation?
The J-curve effect suggests that after a currency depreciation, the current account balance will first fall for a period of time before beginning to rise as normally expected. If a country has a trade deficit initially, the deficit will first rise and then fall in response to a currency depreciation.
Who introduced J-curve?
sociologist James C. Davies
The J-curve hypothesis was introduced in 1962 by American sociologist James C. Davies, who believed that social and political unrest was precipitated by a brief period of sharp decline in economic development after a prolonged period of economic growth and improvement.
What is the difference between the J-curve and S curve?
An exponential growth pattern (J curve) occurs in an ideal, unlimited environment. A logistic growth pattern (S curve) occurs when environmental pressures slow the rate of growth.
How does the J-curve effect relate to the time path of currency depreciation?
What does a J shaped curve demonstrate for population growth?
J-shaped growth curve A curve on a graph that records the situation in which, in a new environment, the population density of an organism increases rapidly in an exponential (logarithmic) form, but then stops abruptly as environmental resistance (e.g. seasonality) or some other factor (e.g. the end of the breeding …
What is the difference between J-shaped and an S shaped population growth curve?
Give an example where percentage cover is a more meaningful measure of the population size….
| S-shaped curve | J-shaped curve |
|---|---|
| (ii) Population becomes stable with zero growth rate and the curve levels. | (ii) Population faces mass mortality, and the curve stops. |
What effect do the real exchange rate and the J-curve have on the current account?
The J Curve effect a depreciation in the exchange rate can cause a deterioration of the current account in the short-term (because demand is inelastic). However, in the long-term, demand becomes more price elastic and therefore, the current account begins to improve.
What does J shaped growth curve of a population indicate?
The J-shaped of growth curve for the population growth in a species indicates the exponential form of growth. There is rapid increase in the growth rate due to the favorable factors.
Who gave the concept of J-curve?
The J-curve hypothesis was introduced in 1962 by American sociologist James C. Davies, who believed that social and political unrest was precipitated by a brief period of sharp decline in economic development after a prolonged period of economic growth and improvement.
Is the example of J shaped growth curve?
J-shaped growth curve A curve on a graph that records the situation in which, in a new environment, the population density of an organism increases rapidly in an exponential or logarithmic form, but then stops abruptly as environmental resistance (e.g. seasonality) or some other factor (e.g. the end of the breeding …