Abstract
This paper tests the cyclicality of fiscal policy in Israel. We find that government deficits are mildly counter-cyclical, mainly in recessions. Expenditures, and in particular, public investment, are pro-cyclical. However, we find that both the government deficit and expenditures have become more counter-cyclical after 1985, a period that is characterized by improved fiscal discipline, following the Economic Stabilization Program. We interpret this result as an indication that Israel is nowadays in a transition from pro-cyclical fiscal policy, as in many developing countries, to
counter-cyclical fiscal policy, as is more common in developed countries.
counter-cyclical fiscal policy, as is more common in developed countries.
| Original language | English |
|---|---|
| Pages (from-to) | 47-66 |
| Number of pages | 20 |
| Journal | Israel Economic Review |
| Volume | 5 |
| Issue number | 1 |
| State | Published - 2007 |
Bibliographical note
Previously published as a discussion paper in:Discussion paper series / Bank of Israel Research Department, Volume: no. 2007.4.
RAMBI Publications
- Rambi Publications
- Israel -- Economic conditions
