This paper investigates macroeconomic effects of a change in the real price of an imported intennediate good in an open OECD type economy with rigid nominal wages. Price level is totally determined from the cost side (labour and oil prices). A rise in the world oil price is shown to produce a stagflationary adjustment pattern, while a depreciation because of the import content of exports may become contractionary. The alleged insulation power of flexible rates in this context appears only as a remote possibility. 'Negative insulation' for price and output components of GNP occurs.