After publishing a warning about the possible economic consequences of the Israeli government’s planned changes to the country’s legal system over a month ago, a group of hundreds of senior economists have signed a further open letter warning of long-term damage to economic growth and the quality of life in Israel.
"In recent weeks," the letter states, "the first signs have become apparent of a flight of capital, obliging the Bank of Israel to continue raising its interest rate rapidly. Even if the markets ultimately stabilize in the short term, cumulative experience from other countries in which the independence of legal and economic institutions has been harmed, and economic research over decades, indicate that there will be long term damage to the rate of growth in the economy and to the quality of life of residents of Israel. It is still not to late to stop the train before the abyss."
The letter also refers to warnings from world leaders and international financial institutions, among them the credit rating agencies, foreign venture capital firms that have instructed companies to transfer their money out of Israel, and Israeli companies that have transferred money overseas and are considering relocating their businesses overseas as well.
"We call on the government of Israel to listen to the many warning voices at home and overseas, among them voices of senior economists whom the prime minster has been in the habit of consulting over the years. Cumulative experience in other countries in which politicians have ignored the warnings of economists - as happened in Britain just a few months ago - shows that such disregard is liable to cost all of us dearly."
Among the signatories to the letter are Prof. Jacob Frenkel, a former governor of the Bank of Israel, Prof. Eytan Sheshinski, Prof. Manuel Trajtenberg, Prof. Martin Eichenbaum, Prof. Eugene Kandel, Prof. Nicole Adler, Prof. Omer Moav, Prof. Avishay Braverman, Prof. Zvi Eckstein, Prof. Elise Brezis, Porf. Avi Ben-Bassat, Prof. Udi Nisan, Prof. Michel Strawczynski, Prof. Reuben Gronau, Prof. Daniel Tsiddon, Porf. Rafi Melnick, Prof. Nathan Sussman, Prof. Yossi Spiegel, Prof. Moshe Hazan, and Prof. Itai Ater.
Published by Globes, Israel business news - en.globes.co.il - on March 2, 2023.
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