Book contents
- The Israeli Economy, 1995–2017
- The Israeli Economy, 1995–2017
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Preface
- 1 Lights and Shadows in the Market Economy
- Part I Government Policy and Macroeconomic Developments
- 2 Fiscal Policy: The Journey Toward a Low Debt to GDP Ratio and Smaller Government
- 3 Israel’s Taxation Policy
- 4 Inflation and Monetary Policy
- 5 From Deficits to Surpluses: Israel’s Current Account Reversal
- 6 Defense and the Economy, 1990–2016
- Part II Reforms and Their Effects
- Part III Investment in Human Capital, Productivity, and Inequality
- Part IV Key Issues in Various Sectors
- Index
- References
2 - Fiscal Policy: The Journey Toward a Low Debt to GDP Ratio and Smaller Government
from Part I - Government Policy and Macroeconomic Developments
Published online by Cambridge University Press: 04 February 2021
By
Book contents
- The Israeli Economy, 1995–2017
- The Israeli Economy, 1995–2017
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Preface
- 1 Lights and Shadows in the Market Economy
- Part I Government Policy and Macroeconomic Developments
- 2 Fiscal Policy: The Journey Toward a Low Debt to GDP Ratio and Smaller Government
- 3 Israel’s Taxation Policy
- 4 Inflation and Monetary Policy
- 5 From Deficits to Surpluses: Israel’s Current Account Reversal
- 6 Defense and the Economy, 1990–2016
- Part II Reforms and Their Effects
- Part III Investment in Human Capital, Productivity, and Inequality
- Part IV Key Issues in Various Sectors
- Index
- References
Summary
The chapter analyzes the structural processes and policies that led to the reduction in the public debt to GDP ratio from 111 percent in 1998 to 60 percent in 2017, and the process of reducing the share of public expenditure in GDP, most of which reflected the fiscal consolidation program in 2002–2004. It shows that the medium-term fiscal targets did not serve as a policy anchor and that during the surveyed period fiscal policy was consistently pro-cyclical. It was also found that policy decisions about specific expenditure programs, often implemented after a long delay, led to many of the changes in the fiscal targets. Accordingly, it is shown that the policy of reducing government expenditure and the tax burden–rather than the deficit–during the previous decade began well before it was manifested in the data. The analysis indicates that the contribution deficit reductions and GDP growth rates to reducing the debt ratio was secondary; most of the debt ratio’s reduction reflected National Accounts revisions, which increased GDP figures retroactivity; revenues from privatization and the repayment of credit provided to the public in the past; and debt revaluation.
Information
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- The Israeli Economy, 1995–2017Light and Shadow in a Market Economy, pp. 41 - 72Publisher: Cambridge University PressPrint publication year: 2021
References
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