Working Paper: NBER ID: w12426
Authors: Stanley Fischer
Abstract: In this paper I reflect on my first year as Governor of the Bank of Israel, which I joined in May 2005. I start by describing the current state of the Israeli economy and monetary policy and economic developments during the past year. I then review a series of issues that have arisen during the past year. Among them are: the monetary mechanism, which is unusual because exchange rate changes have a very rapid impact on prices; the role of inflation and interest rate expectations in policy decisions; the role of the interest rate gap with the US; the role of the Governor as chief economic adviser to the Government; banking supervision; and management and political issues.
Keywords: Monetary Policy; Inflation; Economic Growth
JEL Codes: E50; E65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| interest rate changes (E43) | exchange rate (F31) |
| exchange rate (F31) | inflation rates (E31) |
| increase in interest rates (E43) | decrease in inflation (E31) |
| stable inflation expectation (E31) | effectiveness of monetary policy (E52) |
| government fiscal policies (E62) | economic growth and inflation (O42) |