Devaluation, sticky import prices and trade balance adjustment
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<subfield code="a">The devaluation of a currency is usually assumed to improve the trade balance. In the short run, however, there may be a temporary worsening in the nominal trade balance, a J-curve effect, due to a quick adjustment in import prices and a slow reaction of import quantities. Recent empirical evidence, however, shows that import prices do adjust slowly to exchange rate changes.</subfield>
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