Prof. Karnit Flug

Moody's downgrading of Israel's credit rating was hardly unexpected, but given at this irregular time and the continued negative outlook it represents an extremely unusual step. It reflects Moody's assessment that geopolitical risks have increased sharply for the short and long terms. 

Prof. Karnit Flug, VP of Research at IDI and the William Davidson Senior Fellow for Economic Policy, spoke with The Washington Institute's podcast Decision Points with David Makovsky, and discussed the current economic challenges facing Israel and future development prospects. 

In May 2023, the Knesset approved a two-year state budget for 2023–2024. However, following the outbreak of the war in Gaza and the accompanying conflict in the north, the budget's composition, safety cushions, and especially the priorities it reflects are no longer suited to Israel’s economic and geopolitical realities.

Over the weekend, Moody’s Investors Service announced that it had downgraded Israel’s credit rating from A1 to A2 and assigned it a “negative” credit outlook. Our policymakers would be well advised to study the risk analysis and assessment in Moody’s report closely and to take all possible steps to mitigate the risks. 

This survey was conducted in order to assess public opinion regarding the preferred economic policy in light of the war in Gaza, to identify the main areas of concern to the public, and to examine the public’s views on various social issues.

Coalition funds have been part of the budget-making progress for years. This study examines the trends in the use of these funds under the last three governments. One can see that the volume of coalition funds has grown up to fourfold within two Governments and that their breakdown has been less professional and more directed to interest groups.

The ongoing war poses unprecedented challenges—military, civilian, geopolitical, and economic. Our focus is on providing necessary responses to the needs of the military, the needs of those directly affected in combat areas, mitigating the financial damage to businesses and employees, and rebuilding the communities destroyed on October 7.

Earlier this year, we published an article warning against the dangers of the judicial reforms, to our regret, many of the negative developments about which we warned at the beginning of the year have already come to pass.

Prof. Karnit Flug, IDI's VP of Research, William Davidson Senior Fellow and a former governor of the bank of Israel offers data on the current effects of the controversial judicial overhaul and projections for more ripples as the high tech industry begins to unravel. 

Study on the integration and mobility of individuals from disadvantaged economic backgrounds in the high-tech industry

Debilitating the judicial system would deal a blow to overseas investors’ motivation to invest in Israel and lead to a sharp drop in its credit rating. We need only look at the precedents of Turkey, Hungary, and Poland, to understand just how serious the threat is.

The majority of the population in Israel lacks significant precautionary savings and thus are not capable of dealing with Mega-Macro Shocks - mandatory precautionary savings should be put in place for all citizens for use during such a crisis.

Over the past decade average real wage of Israeli workers increased by 25% - nevertheless their purchasing power is relatively lower than the OECD average

Former Governor of the Bank of Israel Prof. Karnit Flug, explains what lies behind the recent wave of the rise in prices; what is the main tool for dealing with inflation, and how this relates to wage agreements in the public-sector. She makes is clear that we are not back where we were in the 1980s, but, we must deal with the situation without delay.

This study examines patterns of intergenerational mobility and found considerable differences between different population groups

New IDI study finds that only 14% of Israeli children in the bottom income quartile will reach the top quartile

Despite the health and economic crisis that has affected Israel since March 2020, the share of those who say they are satisfied with their economic situation (“somewhat satisfied” or “very satisfied”) has risen from 28% in the summer of 2019 to around 33% in May 2022.

Prof. Karnit Flug, Vice President of Research and William Davidson Senior Fellow for Economic Policy at the Israel Democracy Institute, as well as the former Governor of the Bank of Israel on Israel’s economy after two years of the global pandemic and political crisis in Israel in conversation with Talia Dekel from the Jerusalem Press Club.

Prof. Karnit Flug unpacks the effects of the COVID pandemic on the Israeli economy: Does the fact that Israel is a small and centralized economy work in its benefit and how quickly will it bounce back?

IDI's management convened an online 'town hall' with Yohanan Plesner, Yuval Shany, Karnit Flug and Jesse Ferris to discuss the political, constitutional and economic fallout from the corona crisis, and IDI’s unique role in addressing it. 

Prof. Karnit Flug's press briefing today focued on the Coronavirus’ effect on the Israeli economy and policies that could mitigate the damage inflicted by the pandemic.

What will be the economic ramifications of the coronavirus outbreak on the Israeli economy? Prof. Karnit Flug explains.

Prof. Karnit Flug, former Governor of the Bank of Israel and currently Vice President for Research at the Israel Democracy Institute, analyzes the strengths and weaknesses of the Israeli economy.