Chapter

The Gathering Storm: Israel's Structural Crisis in the 1970s

Michael Bruno

in Crisis, Stabilization, and Economic Reform

Published in print August 1993 | ISBN: 9780198286639
Published online September 2006 | e-ISBN: 9780191603839 | DOI: http://dx.doi.org/10.1093/0198286635.003.0002

Series: Clarendon Lectures in Economics

 The Gathering Storm: Israel's Structural Crisis in the 1970s

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This chapter examines Israel’s structural crisis during the early 1970s. It covers the growth and development of business sector GDP, an international comparison of growth and inflation, the government budget, the increase in internal and external debt, and the impact of high government expenditures. It is shown that every aspect of public-sector policy — including its transfer policy and high taxation, the misallocation of labour force, and distorted subsidization of private investment — were all working in the direction of hampering sound economic growth. Moreover, the government’s own lack of restraint had a direct behavioural impact on the response of economic units in the private sector.

Keywords: GDP; growth; inflation; government budget; debt; government expenditure; Israel

Chapter.  6522 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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