Real interest rates drive Norwegian exchange rates, impacting global trade.
The researchers studied the Norwegian exchange rate and found a strong connection between the real exchange rate and real interest differential, which is related to purchasing power and interest rates. They discovered that this link holds true when comparing Norway's currency to a group of currencies, but not when comparing it to individual countries like the UK and the US. This suggests that unique events in different countries can affect exchange rates when looking at them individually, but not when considering them as a whole.