Using confidential daily data, we analyse how the intervention episode of the Bank of Israel (BOI) from 2013 to 2019 has affected the foreign value of the Israeli new shekel (ILS) and the expectations about its future value. We find that interventions amounting to US dollar (USD) 1 billion are...

Fiscal consolidation has become an important policy prescription for many emerging market countries (EMCs), particularly for the highly indebted ones. Although prudent fiscal policies tend to reduce vulnerabilities, their implementation is usually postponed. This paper represents, to the best of...

This paper extends a small linear model of the Israeli economy to allow for nonlinearities in the inflation-output process that arise from convexity in the Phillips curve and endogenous monetary policy credibility. We find that the dynamic responses to shocks in the extended model more closely...

This paper investigates the transmission of Israeli monetary policy since 1990. Two issues are addressed: the extent to which monetary policy exerts real effects, and the relative importance of different transmission channels. The impact of monetary restraints on aggregate industrial production...

This paper surveys the main theoretical approaches for analyzing movements in the current account of the balance of payments, from the Mundell-Fleming paradigm to modern intertemporal approaches. It discusses the main implications of these analyses for policymaking, highlighting that modern...

Israel was mildly affected by the global recession: following a slowdown in 2009, output is projected to grow by some 4 percent in 2010, led by consumption and exports. Robust fundamentals—including sustained pre-crisis fiscal consolidation—and a swift monetary and fiscal policy response to...

The study shows that the Israeli economy has emerged unscathed from the global financial crisis. The first part of the study outlines the relationship between risk and Israel’s macroeconomic performance, estimated through a regression analysis. The second part of the study focuses on...

Israel’s post-stabilization experience of moderate inflation and eventual disinflation is compared with experiences in other countries. Lessons that emerge from an examination of international experiences indicate the importance of establishing early on credibility in the nominal anchor and a...

Financial decisions of economic agents are based on volatility considerations. However, no aggregate indicators have been used by policymakers and regulators to assess the market risk environment. This paper applies a market volatility indicator to analyze the Israeli''s transition toward...