Norges Bank

Staff Memo

The exchange rate pass-through to consumer prices in Norway

Martin Blomhoff Holm
Staff Memo

The krone depreciated through 2013. It is important for a central bank to understand the potential effects of exchange rate changes on the consumer prices. This Staff Memo presents an empirical analysis of the impact of the exchange rate in Norway, focusing on the extent to which the exchange rate pass-through to prices for imported consumer goods can be regarded as non-linear and symmetric. We find support for the hypothesis of a non-linear exchange rate pass-through. Substantial changes in the krone exchange rate have had a more pronounced relative effect on prices for imported consumer goods than small variations. The results do not, however, provide a basis for asserting that the pass-through is asymmetric.

Staff Memos present reports and documentation written by staff members and affiliates of Norges Bank, the central bank of Norway. Views and conclusions expressed in Staff Memos should not be taken to represent the views of Norges Bank.

ISSN 1504-2596 (online)

Published 27 March 2014 10:04
Published 27 March 2014 10:04