The Central Bank of Iceland has published a research paper where two aspects of exchange rate pass-through are analysed using Icelandic data.

First, whether the pass-through coefficient varies with the degree of “international tradability” of goods. Second, if the pass-through coefficient depends on the monetary policy framework.

Twelve disaggregated price indexes are used for Icelandic data for 2003-2019, a period that includes Iceland’s banking and currency crisis of 2008.

The results show that the pass-through declined around the time Iceland reformed its “flexible inflation targeting,” and that the coefficients are significantly higher for tradable than for nontradable goods.