J Curve

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J Curve

1. In charting, the theoretical trend of a country's trade balance after the devaluation of its currency. After a devaluation in currency, there is often a slight increase in the trade deficit, but the long-term effect is a trade surplus due to the fact that a good sold in a devalued currency makes a good less expensive for international buyers. This is represented graphically as a curve that briefly dips below the x-axis, representing time, before turning upwards, resembling the letter J. On this graph, the y-axis represents the trade balance.

2. In equity funds, the theoretical trend of the internal rate of return over several years. Most funds operate at a loss at their beginning, due in part to their start-up costs. Later, if the fund is successful, the internal rate of return rises significantly. This is represented graphically as a curve that briefly dips below the x-axis, representing time, before turning upwards, resembling the letter J. On this graph, the y-axis represents the internal rate of return.
References in periodicals archive ?
This is referred to as the J-curve phenomenon, because the pattern of cardiovascular risk when plotted against the BP is like a tilted capital J letter.
Owing to lag structure and existing contracts, currency depreciation is said to worsen the trade balance first and improve it only after the lags are realized and contracts expired, hence the J-curve phenomenon. In an attempt to test the phenomenon and mostly due to advances in economic modeling and new methods, different authors have tested the phenomenon for different countries.
"Nonlinear ARDL Approach and the J-Curve Phenomenon." Open Economies Review, 27, 2016, 51-70.
Bahmani-Oskooee and Kutan [12] is the most comprehensive study of the J-curve phenomenon in emerging Europe.
Bahmani-Oskooee and Malixi (1992), who test the J-curve phenomenon for several developing countries, include Brazil in their sample and find support for the J-curve in Brazil.
A special focus is given to the J-Curve phenomenon since it is accepted as the most plausible among all and provides indirect methods to test for other approaches [7].
The results revealed that J-curve phenomenon exists in all oil importing countries of the group.
For one thing, growing evidence suggests the long-debated J-curve phenomenon does exist and that drug regimens that reduce blood pressure to 120-125/70-75 mm Hg or below may be accompanied by an increase in coronary events.
He focused on diastolic pressure because that is the pressure that perfuses the myocardium, and inadequate myocardial perfusion probably causes the J-curve phenomenon. The lack of an increased rate of stroke at low pressures rules out increased pulse pressure as the explanation for the findings, he noted.
Testing the J-Curve phenomenon requires estimation of the short-run dynamics (the error-correction model) of the model.
He focused on diastolic pressure because that is what perfuses the myocardium, and inadequate myocardial perfusion probably causes the J-curve phenomenon. The lack of an increased rate of stroke at low pressures rules out increased pulse pressure as the explanation for the findings, he said.
The results confirm the existence of the j-curve phenomenon for Pakistan.