Economic Policy Program
The underlying determinants of poverty and income inequality are inexorably related to the country’s rates of economic growth. The Economic Policy Program examines these issues from both long-run and short-run perspectives as well as from an international focus, separating between business cycle issues and factors that determine the placement and slopes of Israel’s long-run trajectories.
A Macro Perspective
The current chapter surveys macroeconomic developments in Israel in 2010. It examines the discrepancy between Israel’s good situation, as reflected in various macroeconomic indicators, and its worrying long-term economic problems. Current data indicate respectable growth in terms of GDP and employment, relatively low unemployment, current account surpluses, and reasonable inflation. The long-term problems include relatively low investment, lagging physical infrastructure, and numerous labor market problems, which negatively affect the quality of human capital and labor productivity in Israel. The chapter concludes with a discussion of the considerable problems that stand in the way of attempts to modify Israel’s fiscal policy in order to resolve these problems.
This appears as a chapter in the Center’s annual publication State of the Nation Report: Society, Economy and Policy 2010.