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The J‐Curve Effect and the U.S. Agricultural Trade Balance
Author(s) -
Carter Colin A.,
Pick Daniel H.
Publication year - 1989
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1242027
Subject(s) - depreciation (economics) , economics , liberian dollar , balance of trade , currency , balance (ability) , agriculture , international economics , monetary economics , microeconomics , finance , geography , profit (economics) , medicine , archaeology , financial capital , capital formation , physical medicine and rehabilitation
According to the J‐curve theory, following a currency depreciation, there will be an initial deterioration of the trade balance before an improvement is realized. This paper finds empirical evidence indicating the first segment of the J‐curve does exist for the U.S. agricultural trade balance. A 10% depreciation of the U.S. dollar is estimated to lead a deterioration of the agricultural trade balance that will last for about nine months.