What Matters Now to former BoI governor Karnit Flug: The economy, stupid

Welcome to What Matters Now, a weekly podcast exploration into one key issue shaping Israel and the Jewish World — right now.

Over 30 years ago, American political consultant, James Carville quipped during former US president Bill Clinton's successful 1992 presidential campaign, “It’s the economy, stupid.”

Today, a growing chorus of Israeli economists are echoing this phrase while attempting to pause the government’s judicial overhaul legislation in the hopes of maintaining Israel’s up-till-now flourishing growth.

“We are now at a crossroads and I’m extremely concerned. But when I look back I think we’ve done tremendously well and that’s why I think we have so much to lose," Prof. Karnit Flug, a former governor of the Bank of Israel, told The Times of Israel this week.

Today, Flug is a Vice President of Research and the William Davidson Senior Fellow for Economic Policy at the Israel Democracy Institute and a professor in the Department of Economics at the Hebrew University.

Flug is hardly alone in her concerns: This week, the Bank of Israel issued its Financial Stability Report for the first half of 2023. It warned that growing and prolonged uncertainty around the implications of the controversial legislation poses a threat to the country’s financial system and economy.

In our talk, Flug gives concrete examples of what she and other analysts are seeing, right now.

So this week, we ask Prof. Karnit Flug, what matters now.

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IMAGE: Karnit Flug is a professor at the Hebrew University of Jerusalem, vice-president at the Israel Democracy Institute and former governor of the Bank of Israel (courtesy Israel Democracy Institute)

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