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The Money-Injection Function of the Bank of Israel and the Inflation Process


  • Nissan Liviatan

    (Bank of Israel)


This paper characterizes the monetary history of Israel since 1973 by a single quantitative index in the form of the ìmonetary injection of the Bank of Israelî. The analysis suggests that the main concern of the Bank of Israel in the inflationary period (prior to 1985) was to stabilize the variance of the monetary base rather than to reduce the rate of inflation, about which it could do very little in view of the large fiscal deficits. After the stabilization in 1985 the Bank continued to stabilize the variance of the monetary base but in this period it also followed a policy of disinflation in the framework of an inflation target regime.

Suggested Citation

  • Nissan Liviatan, 2002. "The Money-Injection Function of the Bank of Israel and the Inflation Process," Bank of Israel Working Papers 2002.04, Bank of Israel.
  • Handle: RePEc:boi:wpaper:2002.04

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    References listed on IDEAS

    1. Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
    2. Liviatan, Nissan, 1984. "Tight money and inflation," Journal of Monetary Economics, Elsevier, vol. 13(1), pages 5-15, January.
    3. Alesina, Alberto & Tabellini, Guido, 1987. "Rules and Discretion with Noncoordinated Monetary and Fiscal Policies," Economic Inquiry, Western Economic Association International, vol. 25(4), pages 619-630, October.
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