J curve
In economics, the "J curve" is the time path of a country’s trade balance following a devaluation or depreciation of its currency, under a certain set of assumptions.
After some time, though, the volume of exports starts to rise because of their lower price to foreign buyers, and domestic consumers buy fewer imports, which have become more expensive for them.
Immediately following the depreciation or devaluation of the currency, the total value of imports will increase and exports remain largely unchanged due in part to pre-existing trade contracts that have to be honored.
The asymmetric effects of real exchange rate on trade balance were initially reported by the American economist Mohsen Bahmani-Oskooee from the University of Wisconsin–Milwaukee.
They employed cumulative dynamic multiplier analysis and reported empirical evidence of an asymmetric J-curve in an article on US trade deficit.
Being unable to sell businesses to generate proceeds and fees means some in the industry have predicted consolidation amongst private equity firms.
[citation needed] When a new technology requires significant investment in complementary intangible assets, then this can create a J-curve in productivity growth, at least as it is conventionally measured.
This can lead to underestimation of productivity growth in the early years of technology adoption and overestimation later, when the tangible benefits of intangible investments are harvested.
Davies asserts that revolutions are a subjective response to a sudden reversal in fortunes after a long period of economic growth, which is known as relative deprivation.
Relative deprivation theory claims that frustrated expectations help overcome the collective action problem, which in this case may breed revolt.
The J is steeper on the left hand side, as it is easier for a leader in a failed state to create stability by closing the country than to build a civil society and establish accountable institutions; the curve is higher on the far right than left because states that prevail in opening their societies (Eastern Europe, for example) ultimately become more stable than authoritarian regimes.
