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A New Phillips Curve for Israel

Author

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  • Sigal Ribon

    (Bank of Israel)

Abstract

The paper offers an alternative description of a Phillips curve for the Israeli economy in the last decade. We use a structural model, based on the micro-founded “New Keynesian” relationship between marginal costs and inflation along the lines of the approach presented in Gali and Gertler (1999) and Sbordone (2001) and following the extension for an open economy by Balakrishnan and Lopez-Salido (2002). The estimation results show that the frequency of price adjustments in Israel was relatively high–updating prices every 2 to 3 quarters on average, but in the magnitude of the results for other countries. We also found that the share of price adjustments which is based on backward looking considerations is, on the background of Israel’s inflationary history, low - only about 0.2 to 0.5 of price updates.

Suggested Citation

  • Sigal Ribon, 2004. "A New Phillips Curve for Israel," Bank of Israel Working Papers 2004.11, Bank of Israel.
    • Handle: RePEc:boi:wpaper:2004.11
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    References listed on IDEAS

    as
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    17. repec:bla:pacecr:v:10:y:2005:i:2:p:261-277 is not listed on IDEAS
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    Cited by:

    1. Eyal Argov & Emanuel Barnea & Alon Binyamini & Eliezer Borenstein & David Elkayam & Irit Rozenshtrom, 2012. "MOISE: A DSGE Model for the Israeli Economy," Bank of Israel Working Papers 2012.06, Bank of Israel.
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    4. Júlia Lendvai, 2005. "Hungarian Inflation Dynamics," MNB Occasional Papers 2005/46, Magyar Nemzeti Bank (Central Bank of Hungary).

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