Fiscal Balance During Inflation, Disinflation, and Immigration: Policy Lessons

44 Pages Posted: 15 Feb 2006

See all articles by Assaf Razin

Assaf Razin

Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Date Written: April 1996

Abstract

The paper provides an overview of the role of the fiscal imbalances and the ensuing public debt in explaining major episodes in Israel`s recent economic developments. The main conclusions from the Israeli budgetary developments may have more general validity: (a) deficits lead to inflation and stopping inflation requires elimination of deficits; (b) a major effect of inflation is a large shift of the tax burden from capital to labor; and (c) shocks to labor supply, such as massive labor inflow through immigration, can be absorbed without worsening government finances, when the labor and the housing markets are sufficiently flexible.

JEL Classification: E10, E31, E40, H3

Suggested Citation

Razin, Assaf, Fiscal Balance During Inflation, Disinflation, and Immigration: Policy Lessons (April 1996). IMF Working Paper, Vol. , pp. 1-44, 1996. Available at SSRN: https://ssrn.com/abstract=882933

Assaf Razin (Contact Author)

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel
+972 3 640 7303 (Phone)
+972 3 640 9908 (Fax)

National Bureau of Economic Research (NBER) ( email )

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United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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