ISET

ISET Economist Blog

A blog about economics in the South Caucasus.
Jan
26

Towards a More Equitable Georgia

Last week I discussed the economic consequences of inequality. Contrary to a traditional tenet of economics, empirical research has shown that inequality may have adverse economic consequences. Inequality increases the risk of political instability in a country, posing a threat to investments due to the fact that political unrest is highly detrimental to the profits made from any economic activity. Therefore, foreigners will bring less capital into a country when the risk of instability goes up, and even local investors will move their money over the bor...
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Guest — Eric
A very interesting piece. Well done, Nino! Seems like somebody in the Georgian government has read your analysis about a year ago.... Read More
Monday, 27 January 2014 5:05 PM
Guest — RT
> If the in-kind income generated through smallholder farming would increase in value, inequality would go down more than proport... Read More
Tuesday, 28 January 2014 5:05 PM
Guest — Eric
Reducing inequality and promoting inclusive growth are certainly targeted if one judges by the observed actions or reads the recen... Read More
Tuesday, 28 January 2014 8:08 PM
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Jan
20

Beyond Fairness and Envy: The Economic Effects of Income Inequality

Why should we care about income inequality? According to Nobel Prize laureate Joseph Stiglitz and Harvard economist Jason Furman, “greater inequality leads to more political instability, and greater political instability leads to lower growth” (“Economic Consequences of Income Inequality”, Federal Reserve Bank of Kansas: Journal Proceedings, 1998, pp. 221-232). Consequently, even if one does not care about income inequality directly, there may be reason to care about its indirect effects. In their article "Income Distribution, Political Instability, and ...
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Guest — NP
Any information about: 1) the average income of the top 1% of the population? ; 2) the distribution of Wealth (stock) rather than ... Read More
Tuesday, 04 February 2014 9:09 AM
Guest — NP
P.S: I think a pie chart showing the share in total Income of the different deciles would have been more telling (It would appear... Read More
Tuesday, 04 February 2014 9:09 AM
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Dec
20

Looking Over the Border: The Pension Reform in Armenia

On the first of January, Armenia will adopt an entirely new pension system. This radical reform addresses two problems: widespread poverty among the elderly and a lack of capital in the economy. The very same problems also exist in Georgia, where the standard governmental pension currently is 150 lari, and where the economy is suffering from high capital costs due to notoriously low saving rates. So, it is worthwhile to have a look at what is going on in our neighboring country Armenia. Georgian decision makers may learn important lessons from their expe...
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Guest — Vardan
If it is true that 80% of funds are going to be invested in Armenia, I wonder how is the riskiness scale measured. At the same tim... Read More
Friday, 20 December 2013 10:10 AM
Guest — Lasha
I wonder what does government guarantee mean and how losses are capped, or what is "government" money. It is very difficult refor... Read More
Tuesday, 14 January 2014 10:10 AM
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Sep
16

The Voluntariness Mantra Refuted

Recently, I was made aware of an article by the famous Harvard economist Gregory N. Mankiw ("Defending the One Percent’’, The Journal of Economic Perspectives, 2013). In that article, he puts forward an interesting thought experiment. Assume we were in a state in which the market outcome would lead to absolute equality among economic agents. There was no need for redistribution, as anybody would get the same share of the pie anyway, and a lump-sum tax would finance government expenditures (which were still needed, as there is a demand for public goods). ...
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Guest — NP
Extremely interesting. If you add to this the results from a very interesting literature about poverty emphasizing how, exactly be... Read More
Monday, 16 September 2013 2:02 PM
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Apr
23

Jobless Growth in Georgia

There is no arguing that during the ten years since the Rose Revolution, the Georgian economy registered an impressive growth performance, averaging 6.6% per annum. Summing up Georgia’s post-2004 growth experience, a recent ISET-PI study (Babych and Fuenfzig (2012)), finds it “remarkable not only in light of the 5.3 percent average growth rate in the 1995-2002 period, but also considering that the average GDP growth rate for European and Central Asian developing countries was about 5.1 percent in the period between 2003-2010.” Yet behind the gliste...
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Guest — test
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Tuesday, 23 April 2013 8:08 PM
Guest — Eric
test 5
Tuesday, 23 April 2013 9:09 PM
Guest — M
What is the evidence for the alleged skill mismatch? When me and Yasya were working on the growth diagnostics study we were lookin... Read More
Thursday, 25 April 2013 3:03 PM
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Mar
27

Different Capitalisms

Those among our readers who happened to spend a good deal of their lifetimes in the Soviet Union may remember that there was not just one kind of socialism, but there were many different versions. For example, socialist countries favored different ways to achieve industrialization and economic progress. In China, Mao pushed for what one could call “grassroots industrialization” – villages, small towns, and urban collectives were supposed to independently set up industrial endeavors. Rice farmers started to build up manufacturing plants, factories, and ev...
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Guest — Simon Appleby
Anglo-American capitalism is often defined where "The role of the government is minimal; intervention occurs only in exceptional c... Read More
Friday, 29 March 2013 8:08 AM
Guest — Eric
Simon, in order to conceptualize we need to operate with "ideal" models, "ideal" types, and just philosophical ideas that may be f... Read More
Saturday, 30 March 2013 10:10 PM
Guest — Florian
Eric, what you say exactly coincides with my observations. I was never living in England, so I do not have first-hand information.... Read More
Sunday, 31 March 2013 4:04 PM
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