J curve
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[edit] Davies' J-Curve
Davies' J-curve is part of a model developed by James Chowning Davies to try and explain political revolutions. Davies asserts that revolutions are a subjective response to a sudden reversal in fortunes after a long period of economic growth. The theory is often applied to explain social unrest and efforts by governments to contain this unrest. This is referred to as the Davies' J-Curve, because economic development followed by a depression would be modeled as an upside down and slightly skewed J.
[edit] Balance of trade model
The shape of the trend of a country’s trade balance following a devaluation. A lower exchange rate initially means cheaper exports and more expensive imports, making the current account worse (a bigger deficit or smaller surplus). After a while, though, the volume of exports will start to rise because of their lower price to foreign buyers, and domestic consumers will buy fewer of the costlier imports. Eventually, the trade balance will improve on what it was before the devaluation. If there is a currency appreciation there may be an inverted J-curve.
Following the depreciation / devaluation of the currency the volume of imports and exports will remain level due in part to pre-existing contracts for imported goods that have to be honoured. However, the depreciation will cause the price of imports to rise and therefore total spending on imports will subsequently increase. It is this that causes the worsening of the current account.
Over the longer term a depreciation in the exchange rate can have the desired effect of improving the current account balance. Demand for exports picks up and domestic consumers will switch their expenditure to domestic products and away from expensive imported goods and services. Equally, many foreign consumers may switch to purchasing cheaper imported products instead of their own domestically produced goods and services.
[edit] Country status model
There is a different J-Curve based on the correlation between stability and openness. This theory was suggested initially by the author Ian Bremmer, in his book The J Curve: A New Way to Understand Why Nations Rise and Fall.
The x-axis of the political J-Curve graph measures the 'openness' of the economy in question and the y-axis measures the stability of that same state. It suggests that those states that are 'closed'/undemocratic/unfree (such as the Communist dictatorships of China and Cuba) are very stable; however, as one progresses right, along the x-axis, it is evident that stability (for relatively short period of time in the lengthy life of nations) decreases, creating a dip in the graph, until beginning to pick up again as the 'openness' of a state increases; at the other end of the graph to closed states are the open states of the West, such as the United States of America or the United Kingdom. Thus, a J-shaped curve is formed.
States can travel both forward (right) and backwards (left) along this J-curve, and so stability and openness are never secure. The J is steeper on the left hand side, as it is easier for a leader in a failed state to create stability by closing the country than to build a civil society and establish accountable institutions; the curve is higher on the far right than left because states that prevail in opening their societies (Eastern Europe, for example) ultimately become more stable than authoritarian regimes.
Bremmer's entire curve can shift up or down depending on economic resources available to the government in question. So Saudi Arabia's relative stability at every point along the curve rises or falls depending on the price of oil; China's curve analogously depends on the country's economic growth.
[edit] Medicine
In this case, the x-axis measures either of two treatable symptoms (blood pressure or blood cholesterol level) while the y-axis measures the chance that a patient will develop cardiovascular disease (CVD). It is well known that high blood pressure or high cholesterol levels increase a patient's risk. What is less well known is that plots of large populations against CVD mortality often takes the shape of a J curve which indicates that patients with very low blood pressure and/or low cholesterol levels are also at increased risk. (J-Curve Phenomenon)
