## Fiscal Consolidation in Israel: A Global Fiscal Model Perspective

_IMF Working Papers, November 1, 2006_

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## Bibliographic details
- Authors: Natan P. Epstein, Selim A Elekdag, Marialuz Moreno Badia
- Published: November 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451865134.001

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### Summary
- Fiscal consolidation is an important policy prescription for many emerging market countries (EMCs), particularly for the highly indebted ones.
- This paper represents, to the best of the authors' knowledge, one of the first attempts in the literature to quantify the costs of delaying fiscal consolidation in an EMC.
- The analysis uses the IMF's Global Fiscal Model (GFM).

### Major findings
- Early consolidation through expenditure cuts would result in a substantial increase in Israel's long-term output growth relative to the case with delayed fiscal adjustment.
- Using an alternative fiscal instrument, the authors find that delaying tax cuts would result in cumulative real GDP that is much larger than otherwise.

### Methodology and scope
- Model used: IMF's Global Fiscal Model (GFM).
- Focus: Quantifying costs of delaying fiscal consolidation in an emerging market context, with Israel as the case study.

### Policy implications
- Prudent fiscal policies reduce vulnerabilities, but implementation is often postponed.
- The results underscore that timing and choice of fiscal instruments (expenditure cuts versus tax cuts) materially affect long-term output and cumulative real GDP outcomes.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/fiscal-consolidation-in-israel-a-global-fiscal-model-perspective-19937_