The increase in the inflation rate from about 1 percent in 1986 to over 4 percent more recently has touched off a debate about its possible causes. One culprit often discussed is the decline in the foreign exchange value of the dollar since 1985. In the second article in this Review, “Does Dollar Depreciation Cause Inflation?” R. W. Hafer explores this connection. The author notes that there are many facets to the dollar-inflation linkage. For example, does a change in the exchange rate lead or merely reflect events in the United States relative to other countries? Also, should one calculate the exchange rate bilaterally or multi-laterally. The procedure chosen, as Hafer shows, affects the analysis greatly. Hafer also demonstrates that declines in the foreign exchange value of the dollar are not inflationary nor do they promote an upward spiral in future wages and prices. As the author shows, these relative price changes are, by definition, not inflation. In fact, the evidence suggests that, once the effects of domestic money growth are accounted for, changes in the exchange rate provide no additional explanation of inflation.