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  • J Curve

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    Anoop Patsariya
    11 Ansichten2 Seiten
    The document discusses the "J curve" theory, which states that a country's trade deficit will initially worsen after its currency depreciates because higher import prices will outweigh reduced import volumes. However, over time the relative price changes will boost exports and reduce imports, eventually improving the balance of payments. This process could be relevant for India given the recent depreciation of the rupee, as costlier imports may decrease demand while exports become more competitive.

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    j curve

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    The document discusses the "J curve" theory, which states that a country's trade deficit will initially worsen after its currency depreciates because higher import prices will outweigh reduced import volumes. However, over time the relative price changes will boost exports and reduce imports, eventually improving the balance of payments. This process could be relevant for India given the recent depreciation of the rupee, as costlier imports may decrease demand while exports become more competitive.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Als PPTX, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    11 Ansichten2 Seiten

    J Curve

    Hochgeladen von

    Anoop Patsariya
    The document discusses the "J curve" theory, which states that a country's trade deficit will initially worsen after its currency depreciates because higher import prices will outweigh reduced import volumes. However, over time the relative price changes will boost exports and reduce imports, eventually improving the balance of payments. This process could be relevant for India given the recent depreciation of the rupee, as costlier imports may decrease demand while exports become more competitive.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Als PPTX, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    von 2

    Why current a/c deficit will improve ?

    J curve- A theory stating that a country's trade deficit will worsen initially after the depreciation of its currency because higher prices on foreign imports will be greater than the reduced volume of imports. The effects of the change in the price of exports compared to imports will eventually induce an expansion of exports and a cut in imports--which, in turn, will improve the balance of payments.

    Is it relevent to indian context ?


    Depreciation of rupee from 49rs a dollar to 57rs and again back to 55rs. But over a period of time imports become costlier and demand for this products dampens. On the other side of the trade exports starts increasing and as a result jcurve process will come into effect.

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