This blog has been created to provide an area for economics students to read about how economics impacts daily life. It is especially useful for students to understand the application of macroeconomics as communicated through the media and governmental websites.

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Brief description: The J curve shows the possible effects of a devaluation on the balance of payments. If the Marshall-Lerner condition is true then the balance of payments may intially deteriorate and then improve later.

Detailed description: The Marshall-Lerner condition says that if the sum of the price elasticities of demand for imports and exports is greater than 1 then the balance of payments will improve following a devaluation. It is thought that the Marshall-Lerner condition will not be true in the short runbut may be true in the long run. It is this that gives rise to the J curve.