The Transmission of Monetary Policy in Israel
August 1, 1998
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Summary
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.
Subject: Bank credit, Credit, Currencies, Exchange rates, Financial services, Foreign exchange, Industrial production, Money, Production, Real interest rates
Keywords: central bank, contractionary monetary policy, Credit, Currencies, discount rate, exchange rate channel, Exchange rates, expansionary fiscal policy, foreign currency, Industrial production, inflation rate, interest rate channel, Israel, monetary policy, Real interest rates, reducestotal availability, trade deficit, transmission mechanism, transmission mechanisms, WP
Pages:
45
Volume:
1998
DOI:
Issue:
114
Series:
Working Paper No. 1998/114
Stock No:
WPIEA1141998
ISBN:
9781451943504
ISSN:
1018-5941
