In this paper we propose to augment the traditional relationship between real exchange rates and real interest rates (RERI) by adding the stock market equilibrium condition to it. We introduce the relative dividend yield as the new information variable. In the empirical analysis we use recent...

We examine exchange rate pass-through into aggregate import prices for several industrialized countries in view of Taylor's (2000) suggestion that the degree of pass-through is dependent on importing country inflation. Extending the standard mark-up pricing model under monopolistic competition...