It is possible that the J-curve path for BOT adjustments may be elongated or even inapplicable if exports are NOT predominately priced in the domestic currency and/or imports are NOT predominately priced in the foreign currency.

Question

Quizplus · Accepted Answer

The J-curve effect relies on a depreciation in the domestic currency leading to an increase in export competitiveness and a decrease in import demand. If exports are not priced in the domestic currency or imports are not priced in the foreign currency, the expected changes in export and import demand may not occur, resulting in an elongated or even absent J-curve path.

It Is Possible That the J-Curve Path for BOT Adjustments