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May 1986, 
Vol. 68, No. 5
Posted 1986-05-01

Adjusting to High Inflation: The Israeli Experience

by Zalman F. Shiffer

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. He then examines the specifics of Israel’s adoption of partial wage indexation and the adjustment of its tax system to inflation. Finally, the author looks at how financial and real asset markets took advantage of imperfections in the tax system and the government’s credit programs.