OECD Economics Department Working Papers

ISSN :
1815-1973 (online)
DOI :
10.1787/18151973
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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
 

Israel: Monetary and Fiscal Policy You or your institution have access to this content

Authors:
Charlotte Moeser1
Author Affiliations
  • 1: OECD, France

Publication Date
04 June 2010
Bibliographic information
No.:
783
Pages
35
DOI
10.1787/5kmd3kg94jg1-en

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Israel’s monetary policy framework is broadly sound. Inflation targeting was introduced in the early 1990s, and low single-digit inflation was established by the end of the decade. However, fast transmission from the exchange rate to inflation means the operational challenges differ somewhat from those in many OECD countries. Also, the Bank of Israel has been intervening heavily in the foreign-exchange market, marking a departure from standard practice in inflation targeting. Past progress in fiscal consolidation has been affected by several economic shocks, including the recent downturn. The government’s strategy of lowering tax rates on corporate profits and on personal income is assessed. Also, various avenues for raising revenues on other fronts are suggested. Primary civilian spending is now relatively low in international comparison, the room for savings has narrowed, and many of the necessary future structural reforms probably require initial fiscal outlays. In budgeting, which is strongly controlled by the Ministry of Finance, there is room for various process improvements. This Working Paper relates to the 2009 OECD Economic Survey of Israel (www.oecd.org/eco/surveys/israel).
Keywords:
OECD, public spending, Israel, fiscal policy, public debt, inflation targeting, government deficit, budget rules, taxation, monetary policy, macroeconomic policies
JEL Classification:
  • E: Macroeconomics and Monetary Economics
  • E52: Macroeconomics and Monetary Economics / Monetary Policy, Central Banking, and the Supply of Money and Credit / Monetary Policy
  • E58: Macroeconomics and Monetary Economics / Monetary Policy, Central Banking, and the Supply of Money and Credit / Central Banks and Their Policies
  • H20: Public Economics / Taxation, Subsidies, and Revenue / General
  • H50: Public Economics / National Government Expenditures and Related Policies / General
  • H62: Public Economics / National Budget, Deficit, and Debt / Deficit; Surplus
  • H63: Public Economics / National Budget, Deficit, and Debt / Debt; Debt Management; Sovereign Debt