Review

Alex Cukierman describes recent theories that show how the motives, constraints, and information of policymakers and the public determine monetary policy outcomes. Cukierman explains that the recent theoretical literature on central bank behavior can be divided into positive and normative categories.

Zalman F. Shiffer examines the Israeli response to accelerating inflation, especially its various forms of inflation indexation. Shiffer discusses the general theory of inflation’s effect on price adjustment and the use of indexation.