The J‐Curve Effect and the U.S. Agricultural Trade Balance

According to the J‐curve theory, following a currency depreciation, there will be an initial deterioration of the trade balance before an improvement is realized. This paper finds empirical evidence indicating the first segment of the J‐curve does exist for the U.S. agricultural trade balance. A 10% depreciation of the U.S. dollar is estimated to lead a deterioration of the agricultural trade balance that will last for about nine months.