“…In between these extremes, other models allow for some link between the exchange rate and goods prices, but vary greatly on such issues as the role of domestic factors in import price‐setting, the extent and speed of pass‐through, the relative importance of intermediate and consumer good imports, and the degree to which the monetary policy reaction function governs the response of the aggregate price level and inflation to an exchange rate depreciation (see e.g. Wilson, 1976; Batten and Ott, 1983; Engel, 1993, 2002; McCallum and Nelson, 2000; Allsopp, 2001; Batini, Harrison and Millard, 2001; Burstein, Eichenbaum and Rebelo, 2002; Campa and Goldberg, 2002; Galí and Monacelli, 2002; Smets and Wouters, 2002).…”