 Monetary Policy Rules and Transmission Mechanisms Under Inflation Targeting in IsraelLeonardo Leiderman and Hadas Bar-Or Working Papers Central Bank of Chile from Central Bank of Chile Abstract: This paper analyzes Israel's recent inflation targeting policies and their role in the disinflation process in the 1990s. Special features of Israel underlying inflation targeting are: a high-inflation history; lack of consensus about the benefits from reducing inflation and thereby lack of full credibility of monetary policy; the existence of monetary policy overburdening in its attempts to meet the inflation targets; the coexistence of an exchange rate band together with the inflation targets. A key finding of the econometric analysis is that there is a time-varying passthrough from exchange rates to prices, which depends on the state of the business cycle and the size of exchange rate fluctuations. In the present empirical specifications, monetary conditions are shown to have played a key role in accounting for the various turning points along the disinflation process. Estimates of an analogue of a 'Taylor rule' indicate that in contrast with the monetary accommodation that prevailed in the past, monetary policy in the more recent years has acted as an inflation stabilizer. Date: 2000-05 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:71 Access Statistics for this paper More papers in Working Papers Central Bank of Chile from Central Bank of Chile Contact information at EDIRC. |
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