Understanding the J-Curve: A Pattern of Initial Losses Followed by Significant Gains
The J-Curve effect was first observed in 1973 by Stephen Magee when the U.S. trade balance deteriorated in 1972 despite devaluation of the dollar in 1971. Only after the passage of some time when new prices begin to prevail at the new exchange rate will the trade balance improve. If the trade balance had been …
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