TY  - JOUR
AU  - Leiderman,Leonardo
AU  - Razin,Assaf
TI  - Propogation of Shocks in a High-Inflation Economy:  Israel, 1980-85
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2003
PY  - 1989
Y2  - April 1989
UR  - http://www.nber.org/papers/w2003
L1  - http://www.nber.org/papers/w2003.pdf
N1  - Author contact info:
Leonardo Leiderman
Department of Economics
Tel-Aviv University
Ramat Aviv  69978
ISRAEL
E-Mail: leoleid@post.tau.ac.il

Assaf Razin
Department of Economics
Cornell University
Uris 422
Ithaca, NY 14853
Tel: 607/255-9625
Fax: 607/255-2818
E-Mail: ar256@cornell.edu
AB  - The purpose of this paper is to provide empirical answers to questions related to the propagation of shocks in a high-inflation economy. Do one-time inflationary shocks give rise to long-term persistence, or inertia? Do balance of payments' shocks trigger a process that, through indexation and monetary accommodation, results in long-term changes in inflation? Within the context of a specific hypothesis, influential both in policy discussions and in economic analyses, the paper addresses these issues using Israeli data and vector-autoregression techniques. The evidence does not support the hypothesis that one-time nominal shocks have a persistent effect on the inflation rate, or the hypothesis that long-term changes in inflation are triggered by autonomous fluctuations in the trade balance.
ER  -