Models used by central banks for policy-making need to be adjusted to the "incomplete, endogenous, nonlinear and asymmetric nature" of exchange rate pass-through, a working paper published by the Central Bank of Colombia suggests.

In Nonlinear pass-through of exchange rate shocks on inflation: a Bayesian smooth transition VAR approach, Hernán Rincón and Norberto Rodríguez examine the short- and long-term impacts of exchange rate shocks on inflation along the "distribution chain" using monthly