Persistent Growth Episodes and Macroeconomic Policy Performance in Israel

36 Pages Posted: 16 May 2013

See all articles by Karnit Flug

Karnit Flug

Bank of Israel

Michel Strawczynski

Bank of Israel - Research Department; Hebrew University of Jerusalem - Dept. of Economics

Date Written: May 14, 2013

Abstract

This paper presents an analysis of persistent growth episodes in Israel during the years 1961-2008. The analysis uses, in addition to the standard variables, a new index of the quality of macroeconomic management. The quality of macroeconomic management turns out to have a significant impact on growth episodes. However, our quantitative analysis shows that exogenous variables like world trade and security events had a larger impact on persistent growth episodes than did the policy variables. In contrast to previous studies about growth in Israel, that emphasized the role of supply factors as crucial for explaining growth, we found that these factors are insufficient to explain persistent growth episodes in Israel; demand variables provide a similar explanatory contribution.

Suggested Citation

Flug, Karnit and Strawczynski, Michel, Persistent Growth Episodes and Macroeconomic Policy Performance in Israel (May 14, 2013). Available at SSRN: https://ssrn.com/abstract=2264823 or http://dx.doi.org/10.2139/ssrn.2264823

Karnit Flug

Bank of Israel ( email )

P.O. Box 780
Jerusalem, 91907
Israel

Michel Strawczynski (Contact Author)

Bank of Israel - Research Department ( email )

Bank of Israel Street
Jerusalem
Israel
972-2-6552601 (Phone)

Hebrew University of Jerusalem - Dept. of Economics

Mount Scopus
Jerusalem
Israel

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