Cyclicality of Fiscal Policy in Israel

Israel Economic Review Vol. 7 No. 1, pp. 47-66, 2007

20 Pages Posted: 19 Aug 2012

See all articles by Michel Strawczynski

Michel Strawczynski

Hebrew University of Jerusalem - Eliezer Kaplan School of Economics and Social Sciences; Hebrew University of Jerusalem _ Public Policy

Joseph Zeira

Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR); LUISS Guido Carli, DPTEA

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Date Written: march 19, 2007

Abstract

This paper tests the cyclicality of fiscal policy in Israel. We find that deficits are mildly countercyclical, mainly in recessions. Expenditures, and in particular public investment, are procyclical. However, we find that both government deficit and expenditures have become more countercyclical after 1985, a period that is characterized by improved fiscal discipline, following the Stabilization Program. We interpret this result as evidence that Israel is nowadays in a transition from procyclical fiscal policy, as in many developing countries, to a countercyclical fiscal policy, as is more common in developed countries.

Keywords: cyclicality, fiscal policy, Israel

JEL Classification: E32, H30

Suggested Citation

Strawczynski, Michel and Zeira, Joseph, Cyclicality of Fiscal Policy in Israel (march 19, 2007). Israel Economic Review Vol. 7 No. 1, pp. 47-66, 2007, Available at SSRN: https://ssrn.com/abstract=2132118

Michel Strawczynski (Contact Author)

Hebrew University of Jerusalem - Eliezer Kaplan School of Economics and Social Sciences ( email )

Mount Scopus
Jerusalem, 9190501
Israel

HOME PAGE: http://michelstrawczynski.huji.ac.il/

Hebrew University of Jerusalem _ Public Policy ( email )

School of Public Policy
Jerusalem
Israel
972-2-5881531 (Phone)

Joseph Zeira

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem 91905, Jerusalem 91905
Israel
+972 2 588 3256 (Phone)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

LUISS Guido Carli, DPTEA ( email )

viale Pola 12
Roma, Roma 00198
Italy

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