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Dollarisation and Indexation in Israel's Inflation and Disinflation: ‘There's more than one way to skin a cat’

Author

Listed:
  • Akiva (Edward) Offenbacher

    (Monetary Department, Bank of Israel, PO Box 780, Jerusalem 91007, Israel.)

  • Roy Stein

    (Monetary Department, Bank of Israel, PO Box 1604, Tel Aviv 61015, Israel.)

Abstract

The currency substitution and indexation infrastructure that has prevailed in Israel for over five decades had its inception before the onset of a major inflationary episode and included only minor and short-lived incidents of outright dollarisation. The present paper suggests that portfolio allocation models, based on the return-risk trade-off, provide a better understanding of these distinctive features of the Israeli financial scene than more conventional approaches to currency substitution based on money demand models. Some indicative results and policy implications from estimated equations based on the CAPM are presented. Comparative Economic Studies (2003) 45, 278–305. doi:10.1057/palgrave.ces.8100024

Suggested Citation

  • Akiva (Edward) Offenbacher & Roy Stein, 2003. "Dollarisation and Indexation in Israel's Inflation and Disinflation: ‘There's more than one way to skin a cat’," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 45(3), pages 278-305, September.
    • Handle: RePEc:pal:compes:v:45:y:2003:i:3:p:278-305
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    Citations

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    Cited by:

    1. Sébastien Charles & Jonathan Marie, 2021. "How Israel avoided hyperinflation. The success of its 1985 stabilization plan in the light of post-Keynesian theory," Review of International Political Economy, Taylor & Francis Journals, vol. 28(3), pages 528-558, May.
    2. Windischbauer, Ulrich, 2016. "Strengthening the role of local currencies in EU candidate and potential candidate countries," Occasional Paper Series 170, European Central Bank.

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