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ISET Economist Blog

A blog about economics in the South Caucasus by ISET
May
30

Patience, Genatsvale!

“The one who is patient, wins.” Georgian proverb One of the first things tourists in Georgia notice is how crazy that drive from the airport to the city is. Jumping red lights, breaking rules to take over the jeep in front, the Georgian taxi driver risks his (and not only his!) life to deliver his passenger to the destination. As a distraction from the dangerous ride, the driver might offer the famous “dzhigit” (a brave equestrian) joke: a dzhigit passes on red light, but stops on green – in case another dzhigit is crossing the road. Dzhigit-style d...
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May
29

Universal Basic Income – a Utopian Dream that May Soon Become a Reality

Early next month, the eyes of the world will briefly turn to Switzerland. On June 5th, the citizens of this prosperous country will vote in an unprecedented referendum on the idea of guaranteeing each citizen a basic income equivalent to roughly 30,000 USD per year. At first, the idea may sound completely crazy – after all, if a basic level of income is guaranteed for everyone, why would people want to work or study to acquire a profession? Wouldn’t the entire system collapse when economic activity stops and sources of income dry up? The opinion pol...
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May
23

Georgia’s Revolutions and Economic Development: from 2004 to Present Time

Following the collapse of the Soviet Union, the Georgian nation went through a process of rapid dis-investment and de-industrialization. It was forced to shut down industrial plants, sending scrap metal abroad, and workers into subsistence farming. Hunger has never become an issue thanks to the country’s moderate climate and good soil conditions, yet inequality and associated political pressures rapidly reached catastrophic dimensions, unleashing cycles of violence, undermining the political order and inhibiting prospects of economic growth. *   &nb...
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May
22

On Rational Procrastination

One of the most fundamental assumptions in mainstream economics is the rationality of humans. Yet, as argued by Timothy A. Pychyl, professor of psychology at Carleton University in Canada, frequently observed procrastinating behavior, i.e. the “needless voluntary delay” (Pychyl), cannot be reconciled with the rational man paradigm.  Pychyl claims in his book The Procrastinator’s Digest that procrastinators violate a most fundamental axiom of rationality, namely the so-called transitivity of preferences. If a person prefers dogs to cats and cats to h...
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May
16

Georgia’s Revolutions and Economic Development: From Independence to Rose Revolution

Having just celebrated its 25th anniversary as an independent state, Georgia remains in a state of revolutionary flux. Just like a box of chocolate, this beautiful country is full of contrasting flavors, never losing the ability to surprise and fascinate at every twist and turn of its history.  Most paradoxically, while Georgia’s unprecedented reforms have become an export commodity, many Georgian reformers and revolutionaries are wanted at home for abusing the power of their office. Georgia’s laws and institutions continue to be constantly remodele...
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May
15

Deposit Insurance – a New Reality for Georgia

More than three years ago the ISET Economist blog discussed the idea of deposit insurance and how this idea may apply to Georgia. Today, the deposit insurance scheme is not merely an abstract idea, but a fast approaching reality. Recently, the Ministry of Finance of Georgia discussed a draft law on implementing the deposit insurance system in the country. According to the draft, all bank deposits in Georgia will be insured for up 5,000 GEL.  The deposit insurance program comes at a cost for banks. Each commercial bank will be obliged to pa...
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