Click here to download

Richard Kahn and Israeli Economic Policy, 1957 and 1962
Author/s: Daniel Schiffman 
Year:  2014 Issue: Language: English 
Pages:  43 Pg. 31-73 FullText PDF:  946 KB
DOI:  10.3280/SPE2014-001002
(DOI is like a bar code for intellectual property: to have more infomation:  clicca qui   and here 

This paper documents Richard Kahn’s role as an unofficial advisor to the Israeli Government, using archival and published sources. In 1957, Kahn predicted that the European Economic Community (EEC) customs union would harm Israel’s trade and that the EEC would reject Israel’s application for Associate Membership. He proposed a major reform of the Cost of Living Allowance (COLA) that would significantly reduce real wage protection and move Israel closer to the Swedish wage system. In 1962, he took a neutral position regarding the sustainability of Israel’s international imbalances. He also criticized Israeli policymakers for overestimating the potential benefits of an Israel-EEC commercial agreement, and argued that the EEC would make reducing Israel’s trade deficit more difficult, even if the United Kingdom did not join. Ultimately, Israeli policymakers ignored Kahn’s advice: they continued to push for EEC Associate Membership and failed to adopt his proposal for COLA reform. In that sense, Kahn was unsuccessful as an advisor, but he was probably successful in the more limited sense of helping government officials attain greater clarity on economic issues.
Keywords: Richard Kahn, Israel, Economic Advisors, Trade Deficit, EEC, Wage Policy, COLA
Jel Code: B31, B22

  1. Artstein Y. and Z. Sussman (1977). Wage and Price Controls and the Effectiveness of Devaluations: The Israeli Experience, Unpublished Working Paper, Bank of Israel.
  2. Backhouse E. and J. Forder (2013). Rationalizing Incomes Policy in Britain, 1948-1979, History of Economic Thought and Policy, 1, 2013: 17-35,, DOI: 10.3280/SPE2013-001002
  3. Bank of Israel (1962). Annual Report, [Hebrew] Jerusalem.
  4. Bank of Israel (1965). Annual Report, [Hebrew] Jerusalem.
  5. Becker A. (1960). The Work of the General Federation of Labour in Israel, International Labor Review, 81: 436-55.
  6. Bonne A. (ed.)(1958). The Challenge of Development: Papers of a Symposium Held in Jerusalem, Jerusalem: Eliezer Kaplan School of Economics and Social Science, Hebrew University.
  7. Braun A.R. (1976). Indexation of Wages and Salaries in Developed Economies, IMF Staff Papers, 23, 1: 226-71,, DOI: 10.2307/3866672
  8. Bronfenbrenner M. (1963). Balm for the Visiting Economist, Journal of Political Economy, 71, 3: 293-7,, DOI: 10.1086/258773
  9. Bruno M. (1964). The Use of National Accounting Frameworks for Economic Policy and Development Forecasting: A Survey of Israel’s Research Experience 1958-61, Review of Income and Wealth, 10, 1: 1-22,, DOI: 10.1111/j.1475-4991.1964.tb00972.x
  10. Bruno M. and H.B. Chenery (1962). Development Alternatives in an Open Economy: The Case of Israel, Economic Journal, 72, 285: 79-103,, DOI: 10.2307/2228618
  11. Bruno M. and Z. Sussman (1979). Exchange Rate Flexibility, Inflation and Structural Change: Israel under Alternative Regimes, Journal of Development Economics, 6: 483-514,, DOI: 10.1016/0304-3878(79)90003-8
  12. Cohen R., R. Kahn, W.B. Reddaway and J. Robinson (1964). Statement Submitted by Miss R. Cohen, Mr. R.F. Kahn, Mr. W.B. Reddaway and Mrs. J. Robinson to the Committee on Resale Price Maintenance, Bulletin of the Oxford University Institute of Economics and Statistics, 26, 2: 113-21.
  13. Committee of Experts to Examine the COLA (1966). Report. [Hebrew] Tel Aviv, Histadrut Labor Federation and Industrialists’ Association.
  14. Creamer D. et al. (1957). Israel’s National Income, 1950-1954. Jerusalem: Falk Project for Economic Research and Central Bureau of Statistics Special Series, n. 57.
  15. Economic Planning Authority of the State of Israel (1962). A Proposal for Establishing Goals and Principles for a Development Plan for the Four Years 1963/64-1966/67 (Draft), [Hebrew] Jerusalem.
  16. Edwards S. (2005). Establishing Credibility: The Role of Foreign Advisors, NBER Working Paper, n. 11429.
  17. Evans M.K. (1970). An Econometric Model of the Israeli Economy, 1952-1965, Econometrica, 38, 5: 624-60,, DOI: 10.2307/1912198
  18. Fantacci L., M.C. Marcuzzo, A. Rosselli and E. Sanfilippo (2012). Speculation and Buffer Stocks: The Legacy of Keynes and Kahn, European Journal of the History of Economic Thought, 19, 3: 453-73,, DOI: 10.1080/09672567.2010.501109
  19. Fellner W. et al. (1961). The Problem of Rising Prices, Paris, Organization for European Economic Cooperation.
  20. Fischer S. (1995). Recollections of the United States Role in Israeli Stabilization, Israel Economic Association Conference on the 10th Anniversary of the Israeli Stabilization Program, November.
  21. Fischer S. (2001). Remembering Herbert Stein: His Contributions as an Economist, American Economic Association Conference, New Orleans, January 6.
  22. Friedman M. and R. Friedman (1999). Two Lucky People, Chicago, University of Chicago Press.
  23. Gehrke C., N. Salvadori, I. Steedman, and R. Sturn (2012)(eds.), Classical Economics versus Modern Theories: Essays in Honour of Heinz D. Kurz, Vol. 2, Abingdon, Oxford, UK, Routledge.
  24. Gross N. (2005). The Social Sciences at the Hebrew University until 1948/9: Plans and Beginnings, [Hebrew] in Lavsky (ed.).
  25. Gross N. and Y. Greenberg (1994). Bank Hapoalim: the First Fifty Years, [Hebrew] Tel Aviv, Am Oved.
  26. Halevi N. (1957). The Israeli Labor Movement, Annals of the American Academy of Political and Social Science, 310, 1: 172-81,, DOI: 10.1177/000271625731000118
  27. Halevi N. (1969). Economic Policy Discussion and Research in Israel, American Economic Review, 59, 4, Part 2, Supplement: 74-118.
  28. Halevi N. (2006). The Development in Israel of the Concept of Economic Independence, [Hebrew] Israel Economic Review, 4, 1: 7-11.
  29. Halevi N., N. Gross, E. Kleiman and M. Sarnat (1981). Banker to An Emerging Nation: The History of Bank Leumi Le-Yisrael, Jerusalem, Shikmona Publishing Company.
  30. Harcourt G. and P. Kerr (2009). Joan Robinson, Basingstoke, UK, Palgrave Macmillan.
  31. Kahn R.F. Papers of Richard Ferdinand Kahn. King’s College Archive Centre, Cambridge University.
  32. Kahn R.F. (1947-1948). Tariffs and the Terms of Trade, Review of Economic Studies, 15, 1: 14-9,, DOI: 10.2307/2295923
  33. Kahn R.F. (1948). The 1948 Budget: an Economist’s Criticisms, The Listener, May 6: 738-9.
  34. Kahn R.F. (1949a). Our Economic Complacency, The Listener, February 3.
  35. Kahn R.F. (1949b). A Possible Intra-European Payments Scheme, Economica, 16, 64: 293-304,, DOI: 10.2307/2549585
  36. Kahn R.F. (1950a). The Dollar Shortage and Devaluation. Reprinted in Kahn (1972): 35-59.
  37. Kahn R.F. (1950b). The European Payments Union, Economica, 17, 67: 306-16,, DOI: 10.2307/2549722
  38. Kahn R.F. (1951). Home and Export Trade, Economic Journal, 61, 242: 276-89,, DOI: 10.2307/2226940
  39. Kahn R.F. (1952a). International Regulation of Trade and Exchanges, in Banking and Foreign Trade (5th International Banking Summer School, Oxford), London, Institute of Bankers, Europa Publications.
  40. Kahn R.F. (1952b). Monetary Policy and the Balance of Payments. Reprinted in Kahn (1972): 60-71.
  41. Kahn R.F. (1952c). Comments II, Bulletin of the Oxford University Institute of Economics and Statistics 14: 147-53,, DOI: 10.1111/j.1468-0084.1952.mp14004004.x
  42. Kahn R.F. (1956a). Full Employment and British Economic Policy, Nihon Keizei Shimbun. Reprinted in Kahn (1972): 97-102.
  43. Kahn R.F. (1956b). Lord Keynes and Contemporary Economic Problems, The Listener, May 3 and May 10. Reprinted in Kahn (1972): 103-23.
  44. Kahn R.F. (1957a). The Free Trade Proposals A Symposium: A Positive Contribution?, Bulletin of the Oxford University Institute of Economics and Statistics 19, 1: 63-8. Reprinted in Worswick (1960): 61-6.
  45. Kahn R.F. (1957b). Doubts about the Free Trade Area, The Listener, February 28: 331-3.
  46. Kahn R.F. (1958a). The Pace of Development, in Bonne (1958): 163-98. Reprinted in Kahn (1972): 153-91.
  47. Kahn R.F. (1958b). Memorandum of Evidence Submitted to the Radcliffe Committee. Reprinted in Kahn (1972): 124-52.
  48. Kahn R.F. (1967). The European Economic Community, Speech before the House of Lords, House of Lords Historic Hansard, HL Deb 08 May 1967, vol. 282, cc1197-300.
  49. Kahn R.F. (1972). Selected Essays on Employment and Growth, Cambridge, UK, Cambridge University Press.
  50. King J.E. (2009). Nicholas Kaldor. Basingstoke, UK: Palgrave Macmillan.
  51. Kleiman E. and T. Ophir (1975). The Effects of Changes in the Quantity of Money on Prices in Israel, 1955-1965, [Hebrew] Bank of Israel Review, 42: 14-37.
  52. Kleiman E. (1981). Israel: Economists in a New State, History of Political Economy, 13, 3: 548-79,, DOI: 10.1215/00182702-13-3-548
  53. Kochav D. (2006). Facts and Fiction in the Israeli and Global Economies, [Hebrew] Tel Aviv, Israel Ministry of Defense.
  54. Krampf A. (2009). The Coining of the Expression ‘Economic Independence’ in the Israeli Economic Discourse, [Hebrew] Iyunim Betkumat Yisrael, 19: 1-34.
  55. Krampf A. (2010a). Central Banking in a Developmental State: The Case of the Bank of Israel in the Postwar Period, Working Paper n. 23, Jerusalem Papers in Regulation and Governance, Hebrew University.
  56. Krampf A. (2010b). Economic Planning of the Free Market in Israel during the First Decade: The Influence of Don Patinkin on Israeli Policy Discourse, Science in Context, 23, 4: 507-34,, DOI: 10.1017/S0269889710000190
  57. Kreinin M.E. (1956). Controlled Inflation in Israel, 1949-54, Journal of Political Economy, 64, 2: 111-27,, DOI: 10.1086/257767
  58. Kreinin M.E. (1958). Israel’s Export Problem and Its Policy Implications, Southern Economic Journal, 25, 2: 202-12,, DOI: 10.2307/1055260
  59. Kreinin M.E. (1968). Isra,, DOI: 10.2307/1885899
  60. Kuznets S. (2012). Jewish Economies: Development and Migration in America and Beyond, Vol 1 – The Economic Life of American Jewry. Lo S. and E. G. Weyl (eds.), New Brunswick, NJ, Transaction Publishers.
  61. Lavsky H.(ed.) (2005). The History of the Hebrew University of Jerusalem: A Period of Consolidation and Growth (A), Jerusalem, Hebrew University Magnes Press.
  62. Leeson R. (1998). The Early Patinkin-Friedman Correspondence, Journal of the History of Economic Thought, 20, 4: 433-48,, DOI: 10.1017/S1053837200002455
  63. Leeson R. (2000). Patinkin, Johnson, and the Shadow of Friedman, History of Political Economy, 32, 4: 733-63,, DOI: 10.1215/00182702-32-4-733
  64. Lerner A. (1954). Stability and Economic Independence, [Hebrew] Economic Quarterly, 5-6: 3-11.
  65. Lerner A. (1957). The Histadrut and the Israel Economy, Midstream, 3, Autumn: 74-80.
  66. Liviatan N. (2002). Remarks on the Monetary History of Israel Against the Background of World Trends, [Hebrew] Economic Quarterly, 49, 1: 9-29.
  67. Liviatan O. (1982). The Development of the COLA and a Test of the Frequency of Wage Adjustments to Prices, [Hebrew] Bank of Israel Research Department Discussion Paper, 9-82.
  68. Marcuzzo M.C. (1988). Richard F. Kahn: A Disciple of Keynes, Working Papers, Dept. of Political Economy, University of Modena.
  69. Marcuzzo M.C. (2012). The ‘Elusive Figure who Hides in the Preface of Cambridge Books’: An Appraisal of Richard Kahn’s Contributions, in Gehrke, Salvadori, Steedman, Sturn (2012): 185-206.
  70. Michaely M. (1961). Capital Imports to Israel: Sources, Magnitude and Significance, [Hebrew] Economic Quarterly, 31: 217-42.
  71. Michaely M. (1975). Foreign Trade Regimes and Economic Development: Israel. New York, National Bureau of Economic Research.
  72. Miller R. (2004). The PLO Factor in Euro-Israeli Relations, 1964-1992, Israel Affairs, 10, 1-2: 123-55.
  73. Nelson E. (2009). Milton Friedman and U.K. Economic Policy: 1938-1979, Federal Reserve Bank of St. Louis Review, 91, 5 (Part 2): 465-506.
  74. Palestine Post (1944). Obituary for Augustus Kahn, September 25.
  75. Pardo S. and J. Peters (2012). Israel and the European Union: A Documentary History. Lanham, Maryland, Lexington Books.
  76. Patinkin D., Don Patinkin Papers, 1870-1995. David M. Rubenstein Rare Book and Manuscript Library, Duke University.
  77. Patinkin D. (1962). Professor Patinkin’s Letter to the Governor of the Bank of Israel, [Hebrew] Herut (Newspaper). March 21.
  78. Patinkin D. (1967). The Israel Economy: The First Decade, Jerusalem: Maurice Falk Institute for Economic Research in Israel.
  79. Patinkin D. (1982). Anticipations of the General Theory? And Other Essays on Keynes, Chicago, University of Chicago Press.
  80. Patinkin D. (1994). From Chicago to Jerusalem, [Hebrew] Economic Quarterly, 41, 2: 165-95.
  81. Patinkin D. (1995). The Training of an Economist, Banca Nazionale del Lavoro Quarterly Review, 48, 195: 359-95.
  82. Patinkin D. and J. Clark Leith (eds.)(1978). Keynes, Cambridge, and the General Theory: the Process of Criticism and Discussion Connected with the Development of the General Theory, London, Macmillan.
  83. Pasinetti L.L. (1991). Richard Ferdinand Kahn, 1905-1989, Proceedings of the British Academy, 76: 432-43.
  84. Pasinetti L.L. (1994). Richard Kahn. 10 August 1905-6 June 1989, Cambridge Journal of Economics, 18: 3-6.
  85. Pasinetti L.L. (2007). Keynes and the Cambridge Keynesians, Cambridge, UK, Cambridge University Press.
  86. Pesaran M.H. and G.C. Harcourt (2000). Life and Work of John Richard Nicholas Stone 1913-1991, Economic Journal, 110, 461: 146-65,, DOI: 10.1111/1468-0297.00511
  87. Plunkett M.L. (1958). The Histadrut: The General Federation of Jewish Labor in Israel, Industrial and Labor Relations Review, 11, 2: 155-82,, DOI: 10.2307/2519807
  88. Pomfret R. (1976). Trade Policies and Industrialization in a Small Country: the Case of Israel, Tubingen, J.C.B. Mohr.
  89. Pomfret R. and B. Toren (1980). Israel and the European Common Market: An Appraisal of the 1975 Free Trade Agreement, Tubingen, J.C.B. Mohr.
  90. Prager J. (1986). Wage Indexation and the Israeli Labor Market: The Institutional Imperative, International Journal of Middle East Studies, 18, 3: 259-73,, DOI: 10.1017/S0020743800030476
  91. Radian A. (1984). The Dynamics of Policy Formation: Income Tax Rates in Israel, 1948-1975, Environment and Planning C: Government and Policy, 2, 3: 271-84,, DOI: 10.1068/c020271
  92. Riemer S. (1960). Israel: Ten Years of Economic Dependence, Oxford Economic Papers 12, 2: 141-69.
  93. Riemer S. (1962). The Devaluation of the Israel Pound, Kyklos, 15, 3: 657-70,, DOI: 10.1111/j.1467-6435.1962.tb00082.x
  94. Rochon L.-P. (2001). Cambridge’s Contribution to Endogenous Money: Robinson and Kahn on Credit and Money, Review of Political Economy, 13, 3: 287-307,, DOI: 10.1080/09538250120055159
  95. Ronen Y. (ed.)(1964). The Economy of Israel: Theory and Practice, [Hebrew] Tel Aviv, Dvir Publishing.
  96. Sargent J.R. (1956). Planning in Poland, Political Quarterly, 27, 4: 434-45,, DOI: 10.1111/j.1467-923X.1956.tb01358.x
  97. Seers D. (1962). Why Visiting Economists Fail, Journal of Political Economy, 70, 4: 325-38,, DOI: 10.1086/258661
  98. Sen Gupta A.K. (1958). Appendix II: Survey of Wage-Price Links in Various Countries, IMF Staff Papers 6, 3: 343-68.
  99. Sitton S. and A. Ravid (1964). Israel and the European Common Market, [Hebrew] in Ronen (ed.)(1964).
  100. Tabor D. (1989). Funeral for Richard Ferdinand Kahn, Monday 12th June 1989 (9th Sivan 5749), typescript, archived at Cambridge Traditional Jewish Congregation, Cambridge, UK.
  101. Toporowski J. (2012). Obituary: Tadeusz Kowalik, Royal Economic Society Newsletter, October.
  102. Toye R. (2000). Gosplanners versus Thermostatters: Whitehall Planning Debates and their Political Consequences, 1945-49, Contemporary British History, 14, 4: 81-106,, DOI: 10.1080/13619460008581604
  103. Weyl E.G. (2010). Simon Kuznets: Cautious Empiricist of the Eastern European Jewish Diaspora, Working Paper, Harvard Society of Fellows.
  104. Wiles P.J.D. (1957). Changing Economic Thought in Poland, Oxford Economic Papers, 9, 2: 190-208.
  105. Worswick G.D.N. (ed.)(1960). The Free Trade Proposals, Oxford, UK, Basil Blackwell.
  106. Young W. (2001). The Impact of American Jewry on the Israeli Economy, Topics in US-Israel Relations, n. 7, Shlomo Argov Center for Israel-Diaspora Relations, Bar Ilan University.

Daniel Schiffman, in "HISTORY OF ECONOMIC THOUGHT AND POLICY" 1/2014, pp. 31-73, DOI:10.3280/SPE2014-001002


FrancoAngeli is a member of Publishers International Linking Association a not for profit orgasnization wich runs the CrossRef service, enabing links to and from online scholarly content