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ISET Economist Blog

A blog about economics in the South Caucasus by ISET

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May
22

Free or Fearful? The Fear of Floating in the South Caucasus

In economics there is a long-standing debate on whether emerging markets should adopt a fixed exchange rate currency regime or leave their exchange rates up to markets to decide. Intuitively, exchange rate is just another price, similar to the price on a sack of potatoes, a liter of milk or a kilogram of honey. Except that exchange rate is the price of 1 unit of foreign currency (say, 1 US dollar) in terms of our domestic currency. Textbook economics would tell us that price flexibility is essential for markets to function well, to quickly clear up any s...
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Sep
19

What Do Politicians Promise Us: a Popular Guide to Political Platforms on Agriculture

“To win the people, always cook them some savory that pleases them.” ― Aristophanes, The Knights As the Election Day of October 8th approaches, we hear more and more about the platforms of Georgian political parties. Given that political competition is very fierce, one naturally expects to hear some blatantly populist statements – the kind of political promises (known to humanity from the times of Aristophanes) which are very popular among the voters, but are hard or impossible to implement in practice. Thus, for example, the reform of the tax syste...
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Sep
05

Georgian Pension Reform – an Experiment in Libertarian Paternalism?

Starting from October 1, 2017, a private retirement savings system will be launched in Georgia as part of a broader pension reform. This reform has been discussed by Nino Doghonadze and Yaroslava Babych in Decent Income in Old Age: Georgian Dream or Reality? on the ISET Economist. Today we will focus only on one very interesting aspect of the reform – the “opt-out” principle and its implementation in the Georgian realities. WHAT’S IN THE “OPT-OUT”? The proposed private retirement savings system is based on the “opt-out” principle, according to which...
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Jun
19

A Temporary ‘High’? Improvements in Business, Consumer Confidence Should Not Distract Policy-Makers from the Long-Term View

In the year of elections any piece of economic analysis is usually seasoned with a hefty dose of caution. Every analyst is aware of the fact that the incumbents will be too eager to oversell the ‘good’, while the opposition will pound on the ‘bad’. Weary of taking sides in political battles, economists usually switch on their primary defense mechanism: they start relying (heavily) on the annoying “on the one hand”, “on the other hand” kinds of phrases. I am of course referring to Georgia in the year of 2016. What people should keep in mind, however, is t...
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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
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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