Norges Bank researchers grapple with nonlinear exchange rate pass-through
Authors find empirical results are hard to pin down
Imported goods inflation in Norway is at its highest level since 1988 and researchers at Norges Bank believe exchange rate pass-through may be higher than standard models imply. However, specifying the effect proves tricky.
In a staff memo published on April 4, Pål Bergset Ulvedal and Nikka Husom Vonen study pass-through based on a simple equilibrium correction model and a more complex structural model. Based on the structural model, a 1% depreciation of the krone results in a 0.1% increase in
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