The Role of Monetary Policy in Israel's 1985 Stabilization Effort

International Monetary Fund

No 1990/029, IMF Working Papers from International Monetary Fund

Abstract: Comparing the performances of the Austral, Cruzado and Sheqel programs shows that the latent suggestion that a “heterodox” stabilization program can be implemented without tight fiscal discipline to support a restrictive monetary policy, though welcome in the politicial arena, is unwarranted. Freezes, pegs and controls alone are bound to lead to dismal failure. A highly restrictive monetary policy sustained by a tight fiscal policy persisting for a lengthy interval (in terms of the political horizon), supported by a stable exchange rate as a highly visible nominal anchor and by a temporary but significant erosion of real wages, have succeeded to contain a runaway inflation in Israel.

Keywords: WP; nominal rate; monetary policy; credit market; central bank; discount rate; financial asset; real rate of interest; monetary management; overnight rate; price freeze; rate of change; foreign currency; aggregate demand; market forces; Inflation; Real interest rates; Credit; Price controls; Bank credit; South America (search for similar items in EconPapers)
Pages: 100
Date: 1990-01-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=27182 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1990/029

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().