Using quarterly data from 1970-1987 we estimate a simple econometric model in which inflation and the money supply are … jointly determined and in which expectations of inflation are rational, or forward-looking. The model is estimated using the … recently developed `cointegration' principle in econometrics. The main findings are that Israeli inflation reflected monetary …

The fiscal gains from, and hence the political incentives for, an increase in the inflation rate of ten percentage … inflation increase would have been even larger, however, and would thus have reduced net welfare. Possible institutional reforms …, aimed at making the political costs of inflation more equal to the social costs, are presented and discussed. …

The thesis of this paper is that political differences between parties are a major explanation of inflation and … between which party was in power and the level and variability of inflation in the same period for these two countries. Fourth …, the theory provides a rationale for the commonly observed relationship between inflation and its variability. …

From 1970 to 1985, Israel experienced high inflation. It rose in three jumps to new plateaus and eventually exceeded … of fallen bank shares caused the last big jump in inflation that occurred in October 1983. Bank shares had just collapsed …. Because that was foreseen, inflation immediately rose as predicted by the unpleasant monetarist arithmetic of Sargent and …