Norges Bank

Staff Memo

How much of a tailwind have we had from the weaker krone?

Author:
Bjørn Naug and Einar W. Nordbø
Series:
Staff Memo
Number:
6/2019

It is usual to assume that a weaker currency will stimulate exports and improve the balance of trade. Despite the krone's depreciation in recent years, however, exports have grown little and the non-oil trade deficit has widened. This raises questions about what effects the weaker krone has actually had. We find that exports would probably have been much lower without the depreciation of the krone. Our conclusion, therefore, is that there has been a significant tailwind.

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 2 May 2019 15:00
Published 2 May 2019 15:00