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Between 2008 and 2013, home prices in Israel appreciated by roughly 50 % in real terms, with increases in nearly 60 % in some regions. This paper examines whether this phenomenon reflects the presence of a national or regional housing bubble by applying econometric tests for explosive behavior to quality-adjusted national- and regional-level data on the home price to rent ratio, while controlling for various fundamental factors, including interest rates, income and the leverage ratio. Overall, study results indicate that the national- and regional-level data are inconsistent with a housing bubble scenario. Most of the results are robust to a variety of tests and alternate specifications. The framework I provide to study the Israeli case may be applied to study other housing markets facing similar developments.

The BNT162b2 mRNA vaccine is highly effective against SARS-CoV-2. However, apprehension exists that variants of concern (VOCs) may evade vaccine protection, due to evidence of reduced neutralization of the VOCs B.1.1.7 and B.1.351 by vaccine sera in laboratory assays. We performed a matched cohort study to examine the distribution of VOCs in infections of BNT162b2 mRNA vaccinees from Clalit Health Services (Israel) using viral genomic sequencing, and hypothesized that if vaccine effectiveness against a VOC is reduced, its proportion among breakthrough cases would be higher than in unvaccinated controls. Analyzing 813 viral genome sequences from nasopharyngeal swabs, we showed that vaccinees who tested positive at least 7 days after the second dose were disproportionally infected with B.1.351, compared with controls. Those who tested positive between 2 weeks after the first dose and 6 days after the second dose were disproportionally infected by B.1.1.7. These findings suggest reduced vaccine effectiveness against both VOCs within particular time windows. Our results emphasize the importance of rigorously tracking viral variants, and of increasing vaccination to prevent the spread of VOCs. At early time points after vaccination with a single dose or two doses of the BNT162b2 mRNA COVID-19 vaccine, breakthrough SARS-CoV-2 infections can be disproportionately caused by the B.1.1.7 or B.1.351 variants of concern, underlining the need to ensure rapid and complete vaccination.

This paper explores the interplay between domestic and global monetary policies, capital flows, and exchange rate dynamics in Israel. Using a novel dataset of daily sectoral FX transactions, we examine the transmission of monetary shocks identified from yield curve shifts around central bank announcements. Local projections reveal that foreign financial investors respond strongly and symmetrically to domestic and foreign shocks, which suggests that they react to the interest rate differential. Domestic institutional investors counteract this by rebalancing their portfolios. In particular, the impact of US monetary shocks on Israeli institutional investors and on the exchange rate depends on the shocks’ correlation with the S&P 500 stock index. The findings contribute to a deeper understanding of the mechanisms through which domestic and global monetary policies influence small open economies like Israel, and highlight the limited monetary autonomy of small open economies even under flexible exchange rates.

Abstract RNA viruses are particularly notorious for their high levels of genetic diversity, which is generated through the forces of mutation and natural selection. However, disentangling these two forces is a considerable challenge, and this may lead to widely divergent estimates of viral mutation rates, as well as difficulties in inferring the fitness effects of mutations. Here, we develop, test, and apply an approach aimed at inferring the mutation rate and key parameters that govern natural selection, from haplotype sequences covering full-length genomes of an evolving virus population. Our approach employs neural posterior estimation, a computational technique that applies simulation-based inference with neural networks to jointly infer multiple model parameters. We first tested our approach on synthetic data simulated using different mutation rates and selection parameters while accounting for sequencing errors. Reassuringly, the inferred parameter estimates were accurate and unbiased. We then applied our approach to haplotype sequencing data from a serial passaging experiment with the MS2 bacteriophage, a virus that parasites Escherichia coli. We estimated that the mutation rate of this phage is around 0.2 mutations per genome per replication cycle (95% highest density interval: 0.051–0.56). We validated this finding with two different approaches based on single-locus models that gave similar estimates but with much broader posterior distributions. Furthermore, we found evidence for reciprocal sign epistasis between four strongly beneficial mutations that all reside in an RNA stem loop that controls the expression of the viral lysis protein, responsible for lysing host cells and viral egress. We surmise that there is a fine balance between over- and underexpression of lysis that leads to this pattern of epistasis. To recap, we have developed an approach for joint inference of the mutation rate and selection parameters from full haplotype data with sequencing errors and used it to reveal features governing MS2 evolution.

We use text-mining techniques to measure the accessibility and quality of information within the texts of interest rate announcements published by the Bank of Israel over the past decade. We find that comprehension of interest rate announcements published by the Bank of Israel requires fewer years of education than interest rate announcements published by the Federal Reserve and the European Central Bank. In addition, we show that the sentiment within these announcements is aligned with economic fluctuations. We also find that textual uncertainty is correlated with the volatility of the domestic financial market.

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.

Double machine learning (DML) has become an increasingly popular tool for automated variable selection in high-dimensional settings. Even though the ability to deal with a large number of potential covariates can render selection-on-observables assumptions more plausible, there is at the same time a growing risk that endogenous variables are included, which would lead to the violation of conditional independence. This paper demonstrates that DML is very sensitive to the inclusion of only a few \"bad controls\" in the covariate space. The resulting bias varies with the nature of the theoretical causal model, which raises concerns about the feasibility of selecting control variables in a data-driven way.

This study investigates the impact of increased debt servicing costs on household consumption resulting from monetary policy tightening. It utilizes observational panel microdata on all mortgage holders in Israel and leverages quasi-exogenous variation in exposure to adjustable-rate mortgages (ARMs) due to a regulatory shift. Our analysis indicates that when monetary policy became more restrictive, consumers with a higher ratio of ARMs experienced a more marked reduction in their consumption patterns. This effect is predominantly observed in mid- to lower-income households and those with a higher ratio of mortgage payments to total spending. These findings highlight the substantial role of the mortgage cash-flow channel in monetary policy transmission, emphasizing its implications for economic stability and inequality.

Between 2008 and 2013, home prices in Israel appreciated by roughly 50 percent in real terms, with increases of nearly 60 percent in some regions. This paper examines whether this phenomenon reflects the presence of a national or regional housing bubble by applying econometric tests for explosive behavior to quality adjusted national and regional level data on the home price to rent ratio, while controlling for various fundamental factors, including interest rates, income and the leverage ratio. Overall, study results indicate that the recent housing price appreciations at the national and regional levels are consistent with the developments of the fundamentals - supply and demand factors that are represented by rent payments and interest rates - and not with a housing bubble scenario. Most of the results are robust to a variety of tests and alternate specifications. The framework I provide to study the Israeli case may be applied to study other housing markets facing similar developments.

Between 2008 and 2013, home prices in Israel appreciated by roughly 50 percent in real terms, with increases of nearly 60 percent in some regions. This paper examines whether this phenomenon re_ects the presence of a national or regional housing bubble by applying econometric tests for explosive behavior to qualityadjusted national and regional level data on the home price to rent ratio, while controlling for various fundamental factors, including interest rates, income and the leverage ratio. Overall, study results indicate that the recent housing price appreciations at the national and regional levels are consistent with the developments of the fundamentals - supply and demand factors that are represented by rent payments and interest rates - and not with a housing bubble scenario. Most of the results are robust to a variety of tests and alternate speci_cations. The framework I provide to study the Israeli case may be applied to study other housing markets facing similar developments.