Bank Of Israel
  • Jerusalem, Jerusalem, Israel
Recent publications
Each person’s characteristics may influence that person’s behaviors and outcomes. This study builds and uses a new database to estimate experts’ performance and boldness based on their experience and characteristics. Our study classifies experts providing inflation forecasts based on their education, experience, gender, and environment. We provide alternative interpretations of factors affecting experts’ inflation forecasting performance, boldness, and pessimism by linking behavioral economics, the economics of education, and forecasting literature. The study finds that an expert with previous experience at a central bank appears to have a lower propensity for predicting deflation.
Significant shifts in the composition of consumer spending as a result of the COVID-19 crisis can complicate the interpretation of official inflation data, which are calculated by the Central Bureau of Statistics (CBS) based on a fixed basket of goods. We focus on Israel as a country that experienced three lockdowns, additional restrictions that significantly changed consumer behavior, and a successful vaccination campaign that has led to the lifting of most of these restrictions. We use credit card spending data to construct a consumption basket of goods representing the composition of household consumption during the COVID-19 period. We use this synthetic COVID-19 basket to calculate the adjusted inflation rate that should prevail during the pandemic period. We find that the differences between COVID-19-adjusted and CBS (unadjusted) inflation measures are transitory. Only the contribution of certain goods and services, particularly housing and transportation, to inflation changed significantly, especially during the first and second lockdowns. Although lockdowns and restrictions in developed countries created a significant bias in inflation weighting, the inflation bias remained unexpectedly small and transitory during the COVID-19 period in Israel.
We review several existing text analysis methodologies and explain their formal application processes using the open-source software R and relevant packages. Several text mining applications to analyze central bank texts are presented.
Background: The development of covid-19 vaccinations represents a notable scientific achievement. Nevertheless, concerns have been raised regarding their possible detrimental impact on male fertility OBJECTIVE: To investigate the effect of covid-19 BNT162b2 (Pfizer) vaccine on semen parameters among semen donors (SD). Methods: Thirty-seven SD from three sperm banks that provided 216 samples were included in that retrospective longitudinal multicenter cohort study. BNT162b2 vaccination included two doses, and vaccination completion was scheduled 7 days after the second dose. The study included four phases: T0 - pre-vaccination baseline control, which encompassed 1-2 initial samples per SD; T1, T2 and T3 - short, intermediate, and long terms evaluations, respectively. Each included 1-3 semen samples per donor provided 15-45, 75-125 and over 145 days after vaccination completion, respectively. The primary endpoints were semen parameters. Three statistical analyses were conducted: (1) generalized estimated equation model; (2) first sample and (3) samples' mean of each donor per period were compared to T0. Results: Repetitive measurements revealed -15.4% sperm concentration decrease on T2 (CI -25.5%-3.9%, p = 0.01) leading to total motile count 22.1% reduction (CI -35% - -6.6%, p = 0.007) compared to T0. Similarly, analysis of first semen sample only and samples' mean per donor resulted in concentration and total motile count (TMC) reductions on T2 compared to T0 - median decline of 12 million/ml and 31.2 million motile spermatozoa, respectively (p = 0.02 and 0.002 respectively) on first sample evaluation and median decline of 9.5 × 106 and 27.3 million motile spermatozoa (p = 0.004 and 0.003, respectively) on samples' mean examination. T3 evaluation demonstrated overall recovery without. Semen volume and sperm motility were not impaired. Discussion: This longitudinal study focused on SD demonstrates selective temporary sperm concentration and TMC deterioration 3 months after vaccination followed by later recovery verified by diverse statistical analyses. Conclusions: Systemic immune response after BNT162b2 vaccine is a reasonable cause for transient semen concentration and TMC decline. Long-term prognosis remains good.
We present a hierarchical architecture based on recurrent neural networks for predicting disaggregated inflation components of the Consumer Price Index (CPI). While the majority of existing research is focused on predicting headline inflation, many economic and financial institutions are interested in its partial disaggregated components. To this end, we developed the novel Hierarchical Recurrent Neural Network (HRNN) model, which utilizes information from higher levels in the CPI hierarchy to improve predictions at the more volatile lower levels. Based on a large dataset from the US CPI-U index, our evaluations indicate that the HRNN model significantly outperforms a vast array of well-known inflation prediction baselines. Our methodology and results provide additional forecasting measures and possibilities to policy and market makers on sectoral and component-specific price changes.
This paper provides evidence on the external benefits of homeownership among low-income populations. A natural experiment in Israel generated large changes in neighborhood homeownership rates while holding fixed the residents and housing stock, two primary sources of bias in traditional estimates. When public housing tenants are given the opportunity to buy their units, buyers increase labor supply. Effects are felt in the neighborhood: when homeownership rises by 10 pp, neighborhood home prices rise 1.5–2 percent. Instrumenting for purchases using government discounts generates similar results. Results are relevant for policies using financial incentives to increase homeownership among low-income populations. (JEL H24, I38, J22, R21, R23, R31, R38)
We use proprietary data, survey data, and a field experiment to study the effect of campaigns to raise awareness about lost and forgotten retirement savings accounts. The campaigns were a centralized database to help individuals find inactive accounts and a tax exemption to encourage individuals to close small inactive accounts and avoid new fees that would exhaust the savings. We show that after the campaigns, inactive retirement accounts still received limited attention. This was more pronounced for individuals with low socioeconomic status and low financial literacy. A controlled field experiment suggests that interventions using more personal interactions can increase attention.
The association between Necrotizing Enterocolitis (NEC) and blood transfusion has been the subject of extensive discussion, focusing on red blood cell (RBC) transfusion. In the recent Transfusion Issue [2021;61(11)] Parvizian and colleagues reported that plasma transfusion to neonates was associated with increased risk of NEC development and stated that "the reason for the finding is unknown." Here we propose an explanation to this phenomenon: Although the etiology of NEC is not fully understood, it is conventionally considered a blood circulation disorder in which blood rheology plays a pivotal role. This includes RBC aggregation as an independent effector and blood viscosity, which is determined by the RBC aggregation and the plasma viscosity. Increased RBC aggregation and plasma viscosity have been implicated in the pathophysiology of diverse blood circulation disorders. Both these properties differ between adults and neonates: We have previously shown that the aggregation of RBC of premature neonates is insignificant in their autologous plasma but is markedly enhanced in adults' plasma. Moreover, the viscosity of adults' plasma is considerably higher than that of neonates' plasma. These phenomena infer that the routine transfusion of adults' plasma to neonates, especially with repeated transfusions, would impair blood circulation by provoking a sharp increase in plasma viscosity and RBC aggregation, thereby introducing a circulatory risk to the neonate recipients. This seems to explain the increased risk of NEC morbidity and mortality in neonates receiving adults' plasma, as reported by Parvizian and colleagues, and calls for a reevaluation of plasma transfusion to neonates.
We compare the effect of a text message sent to mobile phones on the actions of minority groups versus the general population in Israel. Using proprietary data from a dedicated survey, we show that the text message had an overall positive effect, but a significantly smaller effect on minority groups. We provide insights into potential channels (low digital literacy, low financial literacy, and low trust) that contribute to the differential effect. This evidence suggests that policy interventions relying on voluntary take-up by participants may be disproportionately taken up by nonmarginalized groups, an unintended effect that can exacerbate rather than mitigate disparities.
While religions frequently preach preferential treatment of fellow believers, the magnitude and economic implications of religiosity-based discrimination are largely unknown. Religiosity is often confounded with ethnicity, but it varies even within ethnicities and religious denominations. It is also seldom observed in administrative data. This paper exploits a setting that avoids these limitations. We analyse grading decisions in national matriculation exams in Israel, exploiting unique features that reveal student religiosity to the graders, and grader religiosity to the researcher. We find evidence of ingroup bias between religious and non-religious groups, but in our setting this effect is very small. There seem to be two main reasons. First, religious ingroup bias is limited to male graders only. Moreover, patterns of bunching in the grade distribution suggest the bias is primarily due to the religious—rather than secular—men. This is a small fraction of the grader population. A second potential reason is that many graders live in integrated communities. Our evidence suggests that living and working in close proximity to people with different levels of religiosity attenuates discrimination.
Red blood cell (RBC) adhesion to vascular endothelial cells (EC) is considered a potent effector of circulatory disorders, and its enhancement is implicated in the pathophysiology of numerous conditions, mainly hemoglobinopathies. The actual RBC/EC interaction is determined by both cellular and plasmatic factors, and the differentiation between them is essential for understanding its physiological implications. Yet, RBC/EC adhesion has been studied predominantly in protein-free media. To explore the plasma contribution to RBC/EC adhesion, we examined the adhesion of human RBC to human vascular endothelial cells in the presence of fresh frozen plasma (FFP) and compared it to that in a protein-free phosphate-buffered saline (PBS). RBC from blood samples freshly-collected from five healthy donors and from fifteen units of packed RBC units were used. The same FFP sample was used in all measurements. In FFP, the RBC form strongly adherent aggregates, which are dispersed as the shear stress (τ) increases to 3.0 Pa, and even at 5.0 Pa a large portion of the RBC are still adherent. In PBS, the RBC are singly dispersed and their adhesion becomes insignificant already at τ = 0.5 Pa. No cross-correlation was found between the adhesion in PBS vs. that in FFP at the same τ. However, in both media, under conditions that form singly dispersed adherent RBC, an inverse correlation between RBC/EC adhesion in PBS vs. that in FFP was observed. This study clearly implies that for understanding the physiological relevance of RBC/EC adhesion it should be determined in plasma.
Elder abuse and neglect are social and health problem. The WHO (Missing voices, views of older persons on elder abuse, 2002; Elder abuse, 2018) defined abuse as a single or repeated act or lack of appropriate action, occurring within trust relationship, which causes harm or distress to an older person. Elder abuse can manifest itself in physical harm; sexual abuse; emotional or psychological abuse; financial exploitation; and neglect—failure to provide basic needs either by commission or omission. Elder abuse may result in physical disability, psychological distress and increased risks of morbidity and mortality. Cognitive impairment and dementia are ranked as the twentieth-century leading disease. Dementia, dependency and stress experienced by the caregiver were found as predictors to the occurrence of elder abuse (Borenstein in Am Psychol 74:719, 2019; DeLiema et al in J Gerontol Soc Sci 73(5):e49–e58, 2018). The present article will focus on the relationship between cognitive impairment and dementia. A definition of elder abuse and neglect will be presented followed by description of the various dimensions of the phenomenon and its consequences. Due to the fact that abuse and neglect are under identified and reported, it is essential to discuss detection and methods of intervention in this field.
Drechsler, Savov, and Schnabl (2017) present a novel reformulation of the bank lending channel of monetary transmission based on market power in local deposits markets, which they term the deposits channel. In this paper we first perform a successful narrow replication of their key empirical results. We then revisit their results on lending in two ways. First, recent studies have pointed out the unique dynamics of credit card loans in Community Reinvestment Act loan origination data. When accounting for this heterogeneity, we find key results are sensitive to the inclusion of credit card banks that raise funds outside of local deposit markets. Second, we show that inconsistencies with related empirical studies can be explained by differences in market power measure, sample period, and the inclusion of alternative control variables. The results highlight that market power on opposing sides of bank balance sheets can impact monetary transmission through alternative channels. Overall, this paper suggests the mechanisms underlying the response of lending to monetary policy remains an important open question.
Israel’s Child Development Account (CDA) program, the Savings for Every Child Program (SECP), is universal and automatically enrolls all children under the age of 18, depositing 51 shekels (approximately USD 14) into their accounts every month. Parents can double this savings amount and can choose an investment vehicle for their children’s deposits. The total realized benefits from the SECP depend heavily on parents’ choices. This study examines how demographic, financial, and intrinsic personality characteristics predict household participation in this program. Using a unique data set combining administrative and survey data, we find that household religion/ethnicity, parental education, and financial circumstances were the most significant predictors of household engagement with the SECP. Important differences in program enrollment and participation are observed by household religion/ethnicity. Our study informs potential policy designs of CDA programs, especially in middle- and high-income countries, and have implications for enabling less-educated and religious/ethnic minority households to save for their children’s future.
This paper studies the link between macroprudential regulation and house prices by asking whether policies that impose higher risk weights on high-LTV mortgages can slow house price growth. Studying a 2010 Israeli policy, we find that the prices on housing units likely to be purchased using mortgages subject to higher risk weights are reduced by about 2 1/2 percent. We find that the policy has larger effects in more expensive areas of the country and, in particular, in lower quality neighborhoods within these more expensive areas. Combining our results with estimates of the effect of this policy on mortgage interest rates, we derive an estimate for the semi-elasticity of house prices with respect to mortgage rates that is consistent with the upper range of estimates reported in the literature.
Objectives We examine whether, on average, plea bargaining encourages guilty pleas among defendants who are factually innocent. Methods We develop a formal theory of plea bargaining in which defendants take into account the possibility of false convictions or acquittals when making plea-bargain decisions. We use an incidentally truncated bivariate probit model to test the theory, which predicts that if innocent defendants plead guilty, the correlation (ρ) between the unobserved heterogeneity regarding selection into trial and regarding conviction at trial should be sufficiently positive. The method does not require knowledge of whether individual defendants are factually guilty or innocent. Since ρ is also predicted to vary directly with the unobserved toughness of prosecutors, we develop a decomposition theorem to distinguish between the effects of defendants and prosecutors in plea bargain decisions. Results Using data on 2012 criminal cases decided in Israeli courts from 2010 to 2011, we find that ρ is large and positive. Hence, defendants who did not plea bargain were positively selected in terms of conviction. This means that defendants who accepted plea bargains had smaller counterfactual conviction probabilities than observationally similar defendants who went to trial. Conclusions The results indicate that, on average, factually innocent defendants in Israel during this period took plea bargains instead of going to trial. This contradicts “innocence effect” theory, which predicts that factually innocent defendants, on average, reject plea bargains. Our findings are important for research on shadow trial theory, since they show that selection into plea bargains cannot be ignored when inferring counterfactual trial outcomes for plea bargainers.
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40 members
Jonathan Benchimol
  • Research Department
Ben Z. Schreiber
  • Information and Statistics Department
Adi Brender
  • Research Department
Itamar Caspi
  • Research Department
Alex Ilek
  • Research Department
Bank Israel Street, POB 780, 91007, Jerusalem, Jerusalem, Israel
Head of institution
Amir Yaron