We construct a dynamic neoclassical model of banking capital where the dynamics are governed by the process of financial capital accumulation and credit risk realizations in a structure where stylized banking characteristics are maintained. This is aimed at focusing on how the...

This paper presents a medium-scale micro-founded model with real and nominal imperfections, named "MOISE" (MOdel for the ISraeli Economy). The model was developed at the Bank of Israel to support monetary policy formulation, and builds on similar models in wide use among central banks. It...

The paper follows Gilchrist and Zakrajsek (2012) (henceforth GZ) in examining the evidence on the relationship between the bond market credit spreads (pricing), and financial intermediation as is reflected in banking conducts and the real business cycles. We use an extensive data set of prices...

The financial crisis motivated thinking about interaction between financial and monetary stability policies. These policies are more interrelated than previously thought. The purpose of the paper is to develop an analytical framework that analyzes these interactions. We use an...

How long does it take for the stock of financial intermediation capital to return to its optimal, profit maximizing, level following a severe shock, and what is the mechanism that governs it? We introduce a dynamic neoclassical model of capital structure that is governed by the process of...

The emergence of institutional investors managing the long-term retirement savings of Israeli households has clearly altered the pattern of financial intermediation in the past decade. Households increasingly hold their savings through these institutions, which in turn provide a growing share of...

The authors used the policy game approach to gain insight into a problem that has puzzled analysts of high inflation economies. Why are programs based on tight fiscal and monetary policies slow at reducing inflation in high inflation countries? Distinguishing between regimes of rule and...