The Transmission of Monetary Policy in Israel

45 Pages Posted: 15 Feb 2006

See all articles by Fiorella De Fiore

Fiorella De Fiore

Bank for International Settlements (BIS) - Monetary and Economic Department

Date Written: August 1998

Abstract

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 is found to be small, although industrial sectors open to trade appear to suffer to a larger extent than closed sectors. Three transmission channels are analyzed by comparing the empirical evidence to that predicted by theory. While the credit and exchange rate channels may be important mechanisms of transmission, the interest rate channel finds weak support in the data.

Keywords: monetary policy, transmission mechanisms, Israel

JEL Classification: E52, E65

Suggested Citation

De Fiore, Fiorella, The Transmission of Monetary Policy in Israel (August 1998). IMF Working Paper No. 98/114, Available at SSRN: https://ssrn.com/abstract=882648

Fiorella De Fiore (Contact Author)

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

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