The J-curve effect refers to the observation that

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The J-curve effect refers to the observation that the trade balance usually deteriorates before it improves after a currency depreciation. This is because the initial increase in export competitiveness due to the depreciation takes time to materialize, while imports become more expensive immediately, leading to an initial increase in the trade deficit. Eventually, if the demand for exports is elastic (i.e. responds strongly to price changes), the increase in export volume will outweigh the increase in import volume, leading to an improvement in the trade balance.

The J-Curve Effect Refers to the Observation That