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