Moreover, the evidence suggests that even countries in which inflation and exchange rate depreciation appear to have been fairly closely linked historically have experienced a sizeable decline in pass-through following the adoption of improved monetary policies.
Some of the most striking macro evidence of a weak correlation between exchange rate depreciation and inflation comes from case studies of episodes in which even highly open economies experienced little upward pressure on inflation following large depreciations of their currencies (Lafleche, 1996/1997; Cunningham and Haldane, 2000; Goldfajn and Werlang 2000; Gagnon, 2004; Burnstein, Eichenbaum, and Rebelo, 2007).