The J-curve effect is the initial worsening of the U.S. trade balance due to a weakening dollar because of established trade relationships that are not easily changed; as the dollar weakens, the dollar value of imports initially rises before the U.S. trade balance is improved.

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The J-curve effect refers to the initial worsening of the U.S. trade balance due to a weakening dollar, as the dollar value of imports initially rises before the U.S. trade balance improvements take effect. This is because established trade relationships and contracts may not be easily changed in the short term.

The J-Curve Effect Is the Initial Worsening of the U