What is J_Curve Effect

The impact of devaluation already we deliberated   in above in term of elasticities of demand for exports and imports do not take into consideration the period over which devaluation affects the balance of payment of the country. However economist are unanimous that at first devaluation makes the balance of payment deficit worse in the short run and then improve it in long term. In the beginning due to low demand and supply elasticities for exports and imports. This because immediately after devaluation few more exports may be sold and more will have to be paid for imports. Both exports and imports will take some time to adjust to the new condition. So if the devaluation causes the balance of payment to worsen in the beginning and then to improve it, there is the J-curve effect