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Inflation and Policy Response - The Israeli Case: 1970-1989

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  • Gottlieb, Daniel

Abstract

The Israeli Economy has served as a laboratory for the study of inflation and government policy reponse. In periods crucial for Israel's experience of inflation, finance ministers were replaced frequently, often changing their predecessors' policies, much to the detriment of inflation. Inflation grew from an average of less than 10% per year in the decade preceding the first oil price shock to nearly 500% by the end of the first half of 1985. In the second half of 1985 a comprehensive and successful stabilization program masterminded foremost by Professor Michael Bruno brought inflation down to 15 to 20% at which level it stabilized until about 1991. The present paper which was written in early 1990 discusses Israeli inflation up to that time. In the years from 1992 to 2000 inflation was further reduced by quite a different strategy and since then Israel has been enjoying price stability.

Suggested Citation

  • Gottlieb, Daniel, 1990. "Inflation and Policy Response - The Israeli Case: 1970-1989," MPRA Paper 4114, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:4114
    as

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    File URL: https://mpra.ub.uni-muenchen.de/4114/1/MPRA_paper_4114.pdf
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    References listed on IDEAS

    as
    1. Gottlieb, Daniel & Melnick, Rafi & Piterman, Sylvia, 1985. "Inflationary Expectations in Israel: A Multiple Indicators Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(2), pages 112-117, April.
    2. Michael Bruno & Stanley Fischer, 1990. "Seigniorage, Operating Rules, and the High Inflation Trap," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 353-374.
    3. Allan Drazen & Elhanan Helpman, 1987. "Stabilization with Exchange Rate Management under Uncertainty," NBER Working Papers 2268, National Bureau of Economic Research, Inc.
    4. Michael Bruno & Stanley Fischer, 1984. "The Inflationary Process in Israel: Shocks and Accommodation," NBER Working Papers 1483, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Inflation; Monetary Policy; Inflation expectations; Anti-Inflation Stabilization Plan; Orthodox policy; Heterodox Policy; Currency substitution; nominal anchor; Israel; Israeli Economy;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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