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Al-Zaytouna Centre for Studies and Consultations has published an Arabic academic paper entitled “The Impact of Israeli Monetary Policy on Palestinian Inflation,” by Mohammad Saleh Reshiq.

This study aims at exploring the impact of Israeli monetary policy on Palestinian inflation rates in 2012–2020, using descriptive analytical methods, while focusing on three independent variables: Interest rates set by the Central Bank of Israel, the exchange rate of the Israeli shekel against the dollar, and Israeli inflation rates.

The study reveals the extent to which the Palestinian economy is affected by the Israeli monetary policy and discusses Palestinian inflation, where the Palestinian economy is considered a subsidiary of the developed Israeli economy.

It concludes that the monetary policy of the Central Bank of Israel concerning the official interest rates did not impact Palestinian inflation rates in 2012–2020. As for the impact of the Israeli shekel exchange rate against the dollar, it was positive in some years, and negative in others, depending on the increase or decrease of the Israeli exchange rates. There is no doubt that inflation rates in Palestine are associated to Israeli ones. The most important recommendations of the study are: the Paris Agreement must be reconsidered in a way commensurate with the needs of the Palestinians and the Palestinian economy; demanding the occupation to pay the dues resulting from the loss of the issuance proceeds, due to the use of shekel in the Palestinian territories; and commercial transactions in Israeli shekels must be decreased and replaced by transactions that depend on the Jordanian dinar and the US dollar.

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>>Academic Paper: The Impact of Israeli Monetary Policy on Palestinian Inflation (Arabic) (47 pages, 2.7 MB)
By: Mohammad Saleh Reshiq.* (Exclusively for al-Zaytouna Centre).

[*] Mohammad Saleh Reshiq holds a master’s degree in Islamic economics from the University College of Da’wah for Islamic Studies, Lebanon, and a master’s degree in political science from The Open University of Israel.

Al-Zaytouna Centre for Studies and Consultations, 2/6/2023

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