The J-curve effect implies that in the short run a currency depreciation will result in a balance of trade surplus for the home country.As time passes, however, the home country's balance of trade will move toward deficit.

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The J-curve effect suggests that following a depreciation of a country's currency, the balance of trade initially worsens before it starts to improve. Initially, the cost of imports rises, leading to a larger trade deficit, but over time, exports become cheaper for other countries, potentially increasing export volume and improving the trade balance.

The J-Curve Effect Implies That in the Short Run a Currency