ISET Economist Blog

A blog about economics in the South Caucasus.

Coordination Games

Some years ago my dad, who is an avid blogger, wrote a piece about a plague of disorderly advertising that was chocking Kyiv. Notices promoting everything under the sun were plastered on the walls, fences, lamp-posts, in metro cars, on the bus stops, even on the pavement. Our own building’s entrance was a sad sight - always covered with debris of paper and glue. Our neighbor, and elderly lady, laboured heroically to wash off the wall and the door frame every now and then, but it was a Sisyphean task.  The clean wall only served as a magnet for ...
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Europe’s Dramatic Monetary Failure

This week, another crazy idea haunted economically faltering Europe. According to the plans of European politicians, the 500 euro note will disappear and cash payments above 5,000 euro will be made illegal. Officially a measure against money laundering, the pretext was correctly debunked by Hans-Werner Sinn in the Frankfurter Allgemeine Zeitung: the true reasons for this step is to push interest rates further down. Big notes allow to store wealth in cash, and if that is not possible anymore, interest rates can be brought even further into the negative, d...
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Men Are Rational, Women Are Adaptive?

INSIGHTS FROM GEORGIA’S CONSUMER CONFIDENCE INDEX For over three and a half years, the ISET Policy Institute has been tracing the trends in the Georgian consumer sentiments. Every month a team of callers dial randomly generated telephone numbers to interview around 330 people from all over Georgia. The interviewer first asks the basic questions about the respondent’s age, level of education, place of residence, and then follows up with questions about the current financial situation of the household and the person’s expectations about the future economic...
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Russo-Turkish Drama: a Christmas Gift for the Georgian Economy?

A “STAB IN THE BACK” AND ITS “GRAVE CONSEQUENCES” On November 24th, a Turkish Air Force fighter jet shot down a Russian SU-24 that briefly strayed into its airspace. One pilot was killed, and another member of the Russian military perished in the rescue attempt. Vladimir Putin called the event a “stab in the back” even though he had turned his back on Turkish warnings about incursions into its airspace. Turkish President, Recep Tayyip Erdogan, facetiously stated that Turkey would not apologize for the event and that Russia should be the one apologizing. ...
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Borrow in Dollar or Lari? That Is the Question!

The Georgian lari’s depreciation against the dollar has been a pressing issue for everyone: economists and policymakers, students, housewives and even the good-for-nothing “birzhavik’s”. The weaker lari may be good news for Georgia’s export competitiveness and trade balance, yet it also pushes up the prices of anything we import. This may include some luxury items we can do without, but also many things that are absolutely essential for the Georgian economy: primary commodities, production inputs and machinery, foodstuffs and medicines. And by raising th...
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