This paper presents an empirical examination of political cycles in Israel by examining the instruments of fiscal and monetary policy at the time of election campaigns. In common with the findings of similar empirical studies undertaken elsewhere, the economic data for Israel support the theory...

We show that even when the exchange rate cannot be devalued, a small set of conventional fiscal instruments can robustly replicate the real allocations attained under a nominal exchange rate devaluation in a dynamic New Keynesian open economy environment. We perform the analysis under...