Comparing the two significant recessions Israel experienced over the last decade, we highlight the importance of sustained fiscal discipline and credible monetary policy during normal times for expanding the set of policy options available at a time of need. In the first recession Israel was...

In the years prior to the Global Financial Crisis, after the advanced economies achieved price stability targets most of the central banks would meet periodically and make decisions regarding the monetary interest rate, taking care to maintain inflation within the target range. Some also took...