The J-curve effect could be a result of currency contract period and pass-through price adjustment.

Question

Quizplus · Accepted Answer

The J-curve effect refers to the phenomenon where a country's trade balance initially worsens following a depreciation of its currency but eventually improves in the long run. This could happen due to factors such as the time it takes for currency contracts to expire and for firms to adjust their pricing strategies. Therefore, the J-curve effect could be influenced by the currency contract period and pass-through price adjustment.

The J-Curve Effect Could Be a Result of Currency Contract