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ISET Economist Blog

A blog about economics in the South Caucasus.

Yasya Babych has not set their biography yet

Oct
03

Do Financial Crises Hurt Economic Recoveries?

The question of the title seems to be a rhetorical one. With the 2008 global financial crisis fresh in our minds, the logic of the vicious cycle between the economic slowdown, troubles in the banking sector, credit crunch, and the subsequent industrial decline reinforcing the credit conundrums seems quite apparent. But are the recessions accompanied by financial crises different from other brands of recessions?  And if so, how? The economists are yet to reach the ultimate verdict. And yet, this purely academic question comes to the fore of political...
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Aug
30

Where is the age of discovery?

The scars of the 2008 global financial crisis, and the festering wounds of the ongoing European debt crisis seem to have obscured one simple textbook truth: long-term economic development largely depends on the growth of the total factor productivity (TFP), sometimes referred to simply as the technological progress. TFP, however, is an elusive phenomenon. This is usually the unexplained part of the output growth, the “residual” left over after we have accounted for all other known contributing factors.  Another uncomfortable truth is that technologi...
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Jun
28

Cultures: Rivers or Pyramids?

I am writing this post in the wake of Florian Biermann’s excellent piece on the role of culture in the economic life of Georgia. The debate itself is infinitely fascinating, as culture is truly one of those complex, stupendously vast concepts, which I find very difficult to grasp, let alone define or analyze. Cultural attitudes play a crucial role in the way human beings interact with one another, the way they define their values and priorities. From the economic perspective, culture has a significant bearing on the functioning and effectiveness of both ...
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Apr
22

Sex Ratio at Birth: is the South Caucasus Heading the Way of China?

This year, approximately 113 baby boys are born in China for every 100 baby girls; 112 boys per 100 girls in India, 111 in Vietnam. The looming social crisis stemming from the significant gender imbalance in the countries of East and Southeast Asia has been in the media spotlight for a long time. Unfortunately, the problem of gender imbalance is not confined to Asia. According to the UN database, between 2005 and 2010, Azerbaijan, Armenia and Georgia held second, third and fourth place in the world after China in gender imbalance statistics. The ratio o...
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Apr
19

The Best Years of Our Lives

Anyone who has seen an old American classic “Best Years of Our Lives” (1946) probably remembers the scene where one of the protagonists, Al Stephenson, a banker who just returned from war in the Pacific, tells his incredulous colleagues: “Our bank is alive. It’s generous. It’s human. We are going to have such a line of customers seeking – and getting - small loans, that people may think we are gambling with the depositors’ money. And we will be. We will be gambling on the future of this country” This speech neatly summed up the prevailing mood of the pos...
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1900
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Mar
29

The Georgian Consumption Puzzle

One of the current economic mysteries of the South Caucasus and the source of certain uneasiness on the part of world development organizations has been the significant rise in the recent years of the consumption to output ratio in Georgia. The reason why such trend can be worrisome is simple. High consumption rates, including private and government consumption, imply low domestic savings. Savings, in turn, are the source of funds for capital investment, one of the important engines of future economic growth. In an open economy the lack of domestic savin...
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