A J-Curve is a line graph that shows a specific economic theory whereby the trade deficit begins to worsen after a national currency depreciates. This relationship occurs in the short-term, whereas over the long-term, the trade balance tends to improve.
This condition occurs because the currency’s devaluation causes an increase in import prices, making importing goods from overseas more expensive.
When import fees increase, internal buyers reduce the purchase of imported products, whereas for external buyers, the prices become more affordable.
Therefore, a J-curve shows a trend where an initial loss is followed by a gain, showing, for example, a country’s trade balance movements. Typically, a J-curve represents a contraction, after which a higher level than the starting level is reached.
John Maynard Keynes
John Maynard Keynes was a British economist who was one of the most important exponents of the global macroeconomic doctrine in modern history. Keynes was born in Cambridge in 1883 and died in Firle in Sussex in 1946. He became famous for his economic theories and his government-backed strategy aimed at full employment in order to combat recessions. This theory is detailed in his most important work, The General Theory of Employment, Interest and Money (1935).
Keynes’ studies were advanced by the Keynesian school of thought after the second world war, counterposing the British economist’s vision with that of the Chicago school of thought’s exponents, which was based on Milton Friedman’s liberalism, and theories advanced in Von Hayek and Von Mises’ Austrian school of thought. Today, the Keynesian model is less used, to the detriment of the liberalist model, but it was the leading macroeconomic strategy up until the 80s.
JPY is the currency abbreviation or the currency symbol for the Japanese yen (JPY), the national currency for Japan and the Republic of the Union of Myanmar. The yen is made up of 100 sen or 1000 rin and is often presented with the symbol ¥. The Meiji government originally introduced the yen as a measure to modernize the country economically.