Cyclicality of Fiscal Policy In Israel

Michel Strawczynski and Joseph Zeira

No 2007.04, Bank of Israel Working Papers from Bank of Israel

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 countercyclical after 1985, a period that is characterized by improved fiscal discipline, following the Israeli Stabilization. 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 countercyclical fiscal policy, as is more common in developed countries.

Keywords: Business Cycles; Fiscal Policy; Israel (search for similar items in EconPapers)
Pages: 37 pages
Date: 2007-04
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Citations: View citations in EconPapers (10)

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Journal Article: Cyclicality of fiscal policy in Israel (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:boi:wpaper:2007.04

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