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This study investigates the characteristics of business cycles in Israel in the context of financial and macroeconomic shocks. The findings of this study are compared with those of an IMF study of recessions in the advanced economies. It was found that in Israel, in the years 1991 to 2009, recessions related to financial shocks were longer than other recessions, and there was a greater loss of GDP. This result is in contrast with the findings regarding recessions in the years 1960-90. It was found that until the 1990s, Israel's business cycles were more similar to those of the emerging market economies than to those of the advanced economies. An analysis of the elasticity of Israel's GDP to financial crises and monetary shocks shows that GDP became more sensitive after 1995, whereas its sensitivity to other macroeconomic shocks declined. This is consistent with the transition to price stability and to the broadening of the spread of financial assets in the last decade.
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