Author Question: Describe what is a J Curve? What will be an ideal response?[br][br][b][color=#FBB117]Question ... (Read 57 times)

james · **on:** Jun 30, 2018

Describe what is a J Curve?

What will be an ideal response?

Question 2

Describe the crisis in Russia starting from 1989. Explain why?

What will be an ideal response?

jointhecircus · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The time lag with which real currency depreciation improves the current account. The current account is measured in terms of domestic output, and can drop quickly right after real currency depreciation because most import and export orders are placed several months in advance. In the first few months after the depreciation, export and import volumes therefore may reflect buying decisions that were made on the basis of the old real exchange rate.

Answer to Question 2

Students should emphasize lack of legal system, tax collection, corruption, organized crime, inflation, seigniorage financing, inability to reduce spending, reduction in oil prices, gold prices, world's recession etc. high and unsustainable interest rates, and continued support from the IMF for fear of collapse of the regime, including a possible nuclear threat if Russia decided to sell off its arsenal.