Anmerkungen zur J-Kurve

Abstract

Observation on the J Curve

The article examines the conditions under which a J curve effect occurs in the balance- of-trade reaction of a country following an exchange rate change. Special consideration is given in invoicing conditions in the multicurrency case. The analysis is subdivided into three phases following an exchange rate change: the short-term contract phase, the subsequent pass-through phase and the then following quantitative reaction phase. It transpires that the form of the J curve over these three phases depends on the invoicing usages and the balance-of-trade surplus or deficit within the contract phase, the exchange rate elasticities of foreign trade prices during the pass through phase, and the price elasticities in exporting and importing in the quantitative reaction phase. In the following empirical analysis it is examined whether, for the balance of trade of the Federal Republic of Germany in the 1972 – 1983 period, the conditions for a primary anomalous J curve effect prevailed. The invoicing usages in German foreign trade indicate that J curve reactions are less probable and marked when parity changes are undertaken within the framework of the European Monetary System relative to the currencies of the most important trading partners of Germany (France, Benelux). With respect to other trading partners, however, marked anomalous primary reactions in the sense of the J curve effect are realistic.