ISET

ISET Economist Blog

A blog about economics in the South Caucasus.
Feb
01

Do We Need to Worry About the Generation Deficit in the Electricity Market? And What Can Be Done About It?

Looking at annual consumption and generation trends, from 2012-2016, it is clear that generation typically exceeded consumption. Consequently, the generation-consumption gap remained positive. However, in 2017 this trend reverted, and the electricity generated by local resources on the Georgian market was no longer enough to supply the local demand. As shown in Figure 1, the gap widened even further in 2018; with the negative gap increasing by 30% (from 344 mln. kWh in 2017 to 447 mln. kWh in 2018). This significant reversal has motivated us to explore ...
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Jan
25

Why Everyone Should Pay to Use Water, and How This Could (and Probably Will) Be Done in Georgia

“At least we have a lot of water - why should I pay for it?” One can frequently hear this phrase in Georgia. This popular saying is based on the relative abundance of water resources the country has: roughly 15,597 cubic meters of renewable freshwater resources per capita a year, well above the 2,961 cubic meters per capita in the European Union (World Bank 2014). However, having a resource does not mean being able to use it, nor being able to do so in a sustainable manner. Georgia lacks infrastructure both for water supply and sanitation, providing drin...
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Dec
28

Is There Need For a More Competitive Electricity Generation Market?

Why do we care about competitiveness in energy markets? And, what are the benefits of increased competition from the supply side of the electricity market? The main reason for the additional social surplus derives from increased energy consumption at lower prices. Increased competition in the electricity market is expected to translate into fewer market distortions – be they simply due to the abuse of market power or to the survival of inefficient firms – and, therefore, increased efficiency. Increasing the level of competitiveness in the electricity mar...
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Dec
24

Holiday Gifts Are Extremely Inefficient, So Why Do We Bother?

Today and tomorrow over a third of the world’s population (around 2 billion people) will be celebrating Christmas1. Traditionally, the holiday season will inevitably feature an exchange of gifts. The sums spent on Christmas gift-giving are huge! For example, in 2018 the expected spending on Christmas gifts in the United States is around 885 USD per person2 - this is about 2.8% of what someone in the middle of income distribution earns per year. If we work backwards from these figures and assume that a similar share of an average family’s income is devote...
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Dec
14

Are Giorgi and Mariam More Employable than Arthur and Zeynab?

  It all started with a simple exercise for my Master’s project in which I tried to understand the underlying causes of the observed wage gap between ethnic Georgians and ethnic minorities in the country. After more than a decade, a reputable international journal has published a paper reporting on the experimental evidence my colleagues and I collected and analyzed on labor market outcomes for ethnic minority and female citizens of Georgia. Back in 2008, using the Integrated Household Survey collected by the statistics office of Georgia for 2007 an...
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Dec
03

Pursuing Real Growth: The Importance of This Year’s Nobel Memorial Prize in Economic Sciences for the Planet and for Us

This year has plagued a number of countries with tremendous natural disasters and extreme weather events. Greece was challenged with extensive fires and South Africa with a shortage of water. As late as November this year, the US was still struggling to tame forest fires. Something is certainly happening with the climate. These problems arise from society only been concerned with growth. The issue is that for far too long we have been assuming that economic growth has no impact on the climate and, more generally, on nature. It is especially concerning th...
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