|
||||
| Abstract | ||||
|---|---|---|---|---|
| This paper presents a monthly structural model for evaluation of inflation and monetary policy in Israel. This model includes some structural equations based on New-Keynesian theory, however the main emphasis is on the empirical side. The CPI inflation process in this model is constructed by three components modeled separately: the equation for housing - behavior of this component is unique, because measured housing prices are linked almost completely to the exchange rate of shekel against dollar; the equation for apparel and footwear - this component characterized by large fluctuations because of seasonal factors; and the rest of the components of the CPI. | ||||
| The model presented below may be useful for two purposes: first - forecasting of inflation and other related variables, mainly in the short run; second - derivation of the key policy interest rate consistent with achieving the inflation target. | ||||
| The full article (Hebrew) in PDF file () Back to previous page |
||||