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Are monetary surprises effective? The view of professional forecasters in Israel

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  • Ilek, Alex

Abstract

We analyze the effect of the Bank of Israel monetary surprises on key variables in the Israeli economy, in the view of professional forecasters, by exploiting a unique daily dataset. We found that although the effect of monetary surprises on the exchange rate was stable over the whole sample, the pass-through from the exchange rate to inflation significantly declined after 2007. We found stability in the effect of the monetary surprises on real activity through the information channel introduced by Nakamura and Steinsson (2018). Finally, we found robust evidence that professional forecasters in Israel form their expectations rationally.

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  • Ilek, Alex, 2021. "Are monetary surprises effective? The view of professional forecasters in Israel," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 516-530.
    • Handle: RePEc:eee:reveco:v:76:y:2021:i:c:p:516-530
    DOI: 10.1016/j.iref.2021.06.009
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    Cited by:

    1. Yuriy Gorodnichenko & Rafi Melnick & Ari Kutai, 2023. "Information and the Formation of Inflation Expectations by Firms: Evidence from a Survey of Israeli Firms," NBER Working Papers 31507, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Professional forecasters; Monetary surprises; Policy effectiveness;
    All these keywords.

    JEL classification:

    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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