This paper characterizes the monetary history of Israel since 1973 by a single quantitative
index in the form of the “monetary injection of the Bank of Israel”. The analysis suggests that the
main concern of the Bank of Israel in the inflationary period (prior to 1985) was to stabilize the
variance of the monetary base rather than to reduce the rate of inflation, about which it could do
very little in view of the large fiscal deficits. After the stabilization in 1985 the Bank continued to
stabilize the variance of the monetary base but in this period it also followed a policy of
disinflation in the framework of an inflation target regime.

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1 I thank Jenny Kogan for efficient research assistance, and Y.Djivre, A. Offenbacher, Z. Urbach and H. Barkai
for their comments.