J curve

Extracted Attributes

• Type

  Diagram/Concept

• Core Principle

  Illustrates that things may get worse before they get better.

• General Definition

  A J curve is any of a variety of J-shaped diagrams where a curve initially falls, then steeply rises above the starting point.

• Application (Medicine)

  Appears in graphs where the X-axis measures treatable conditions (e.g., cholesterol levels or blood pressure) and the Y-axis indicates the likelihood of a patient developing a specific disease (e.g., cardiovascular disease).

• Application (Economics)

  Refers to the time path of a country’s trade balance following a devaluation or depreciation of its currency, where the trade deficit initially worsens before improving.

• Application (Political Science)

  Part of a model developed by James Chowning Davies to explain political revolutions, asserting that revolutions are a subjective response to a sudden reversal in fortunes after a long period of economic growth (relative deprivation).

• Primary Application (Venture Capital)

  Describes the typical pattern of returns for private equity and venture capital funds, which are initially negative due to investment costs and management fees, but eventually become highly positive as successful investments mature and are realized.

J curve

A J curve is any of a variety of J-shaped diagrams where a curve initially falls, then steeply rises above the starting point.

Web Search Results

• J Curve - Understanding How J Curve Works in PE and Economics

  A J Curve is a chart where the line plotted falls at the beginning and rises gradually to a point higher than the starting point, forming the shape of the letter J. It reflects a phenomenon in which a period of unfavorable returns is followed by a period of gradual recovery that rises to a higher point than the starting point. The phenomenon applies in a variety of fields such as private equity funds, economics, medicine, and political science. J Curve Chart Source: Wikimedia Commons [...] In private equity, the J Curve represents the tendency of private equity funds to post negative returns in the initial years and then post increasing returns in later years when the investments mature. The negative returns at the onset of investments may result from investment costs, management fees, an investment portfolio that is yet to mature, and underperforming portfolios that are written off in their early days. [...] In economics, a J Curve refers to a change in the country’s balance of trade, often following a currency devaluation or depreciation. A weak currency means that imports will be costly, while it will be more profitable to export commodities. The imbalance leads to a fall in the current account, hence a smaller surplus or a bigger deficit.

• J curve - Wikipedia

  In economics, the "J curve" is the time path of a country’s trade balance following a devaluation or depreciation of its currency, under a certain set of assumptions. A devalued currency means imports are more expensive, and on the assumption that the volumes of imports and exports change little at first, this causes a fall in the current account "Current account (balance of payments)") (a bigger deficit or smaller surplus). After some time, though, the volume of exports starts to rise because [...] In political science, the "J curve" is part of a model developed by James Chowning Davies to explain political revolutions. Davies asserts that revolutions are a subjective response to a sudden reversal in fortunes after a long period of economic growth, which is known as relative deprivation. Relative deprivation theory claims that frustrated expectations help overcome the collective action problem, which in this case may breed revolt. Frustrated expectations could result from several factors, [...] Wikipedia # J curve A J curve is any of a variety of J "J (letter)")-shaped diagrams where a curve initially falls, then steeply rises above the starting point. ## Contents ## Political economy ### Balance of trade model

• J-Curve Effect | Private Equity Fund Economics - Wall Street Prep

  The J-curve is a graphical representation of private equity returns, where initial losses cause a dip, followed by a reversal as the firm realizes gains on its investments. In the private equity industry, the term “J-curve” refers to the trend line that shows the timing of a fund’s lifecycle stages relative to the proceeds received by a fund’s limited partners (LPs). [...] background Wall street prep logo Wall street prep logo # J-Curve Step-by-Step Guide to Understanding the J-Curve Effect in Private Equity Fund Economics ## What is the J-Curve? The J-Curve illustrates the timing of the receipt of proceeds by a private equity fund’s limited partners (LPs). J-CurveJ-Curve J-Curve J-Curve ## J-Curve in Private Equity: Growth of Fund Returns

• J Curve: Theory, Uses, and Example - Investopedia

  A J Curve is an economic theory which states that, under certain assumptions, a country's trade deficit will initially worsen after the depreciation of its currency—mainly because in the near term higher prices on imports will have a greater impact on total nominal imports than the reduced volume of imports. This results in a characteristic letter J shape when the nominal trade balance is charted as a line graph. ### Key Takeaways ## Understanding a J Curve [...] ### Important Broadly speaking, any phenomenon that shows an initial paradoxical response to a change followed by a strong response in the expected direction can display a letter J shape when charted as a line graph, and thus be referred to as a J Curve. [...] In medical circles, J Curves appear in graphs, where the X-axis measures either one of two possible treatable conditions, such as cholesterol levels or blood pressure, while the Y-axis indicates the likelihood of a patient developing cardiovascular disease.

• J Curve: Definition and Uses in Economics and Private Equity

  Suzanne is a content marketer, writer, and fact-checker. She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies. ## What Is a J-Curve? A J-curve is a trendline that shows an initial loss immediately followed by a dramatic gain. In a chart, this pattern of activity would follow the shape of a capital "J". [...] The term J-curve is used to describe the typical trajectory of investments made by a private equity firm. ### Important The J-curve is a visual representation of the plain fact that sometimes things get worse before they get better. Private equity firms have a different path to profitability than public companies or the funds that invest in them. [...] The J-curve is useful to demonstrate the effects of an event or action over a set period of time. Put bluntly, it shows that things are going to get worse before they get better. In economics, it is often used to observe the effects of a weaker currency on trade balances. The pattern is as follows: The devaluation of the nation's currency had an immediate negative effect because of an inevitable lag in satisfying greater demand for the country's products.

A J curve is any of a variety of J-shaped diagrams where a curve initially falls, then steeply rises above the starting point.