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War and Israel’s economy: lessons from history

One question we have received frequently from clients is what lessons Israel’s previous wars offer when thinking about the effects on its economy from the conflict today. While no two events are the same, one lesson is that the near-term hit to economic activity is likely to be sharp but temporary. Past wars also led to a longer-term shift in the fiscal stance, the consequences of which depended on the state of the economy before the war and other economic policy responses. There are reasons to think that the current war against Hamas may have inflationary consequences, albeit nothing like the scale of the 1970s.

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