Friday, September 11, 2015

Term of the Day: J-Curve Effect

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September 11, 2015
J-Curve Effect

A type of diagram where the curve falls at the outset and eventually rises to a point higher than the starting point, suggesting the letter J. While a J-curve can apply to data in a variety of fields, such as medicine and political science, the J-curve effect is most notable in both economics and private equity funds; after a certain policy or investment is made, an initial loss is followed by a significant gain.

Breaking It Down:

An example of the J-curve effect is seen in economics when a country's trade balance initially worsens following a...

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