A Macro Perspective of the Economy and Society in Israel

This chapter surveys macroeconomic developments in Israel during 2011 and discusses the difference between cyclical/temporary problems and structural problems. It also takes an in-depth look at possible solutions to the economy’s structural problems.  The social protest movement of the summer of 2011 and the Trajtenberg Committee Report placed these problems – which are expected to remain dominant in the foreseeable future – high on the public agenda. The data for 2011 indicate rapid GDP growth, a decline in unemployment to very low levels, and a significant increase in investment; they also point to a reasonable level of inflation.  Forecasts for 2012 point to a major slowdown in the wake of global developments.  The chapter discusses a possible fiscal policy for distinguishing between temporary and structural problems, and suggests (in accordance with the “Proposal by the Heads of the Taub Center – A New Public Agenda for Israel,” Eran Yashiv (ed.) 2011) a number of policy solutions designed to address the structural problems.

This appears as a chapter in the Center’s annual State of the Nation Report 2011-2012.