Intro -- Contents -- I. INTRODUCTION -- II. FISCAL PERFORMANCE IN ISRAEL -- III. THE MODEL -- IV. FISCAL CONSOLIDATION: NOW VERSUS LATER -- V. TAX CUTS -- VI. CONCLUSION -- APPENDIX. CALIBRATION OF GFM -- REFERENCES.

Fiscal consolidation has become an important policy prescription for many emerging market countries (EMCs), particularly for the highly indebted ones. Although prudent fiscal policies tend to reduce vulnerabilities, their implementation is usually postponed. This paper represents, to the best of...