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Pawnshop Mentality
02 June 2014

“Jewelry you can pawn whenever you encounter financial difficulties", we were told by a friend. In our circles of acquaintances, there are quite a number of people who enjoy the services of pawnshops. The reasons range from renovating apartments, paying tuition for children, and buying new hi-fi systems for the car, to repaying the 1000 lari that the 18-year-old son had lost in gambling.

Are Georgians Too Impatient?
10 March 2014

Assume you have lent your brother 1000 laris, and because he is a close family member, you do not charge interest from him. One day you get a phone call from your brother, and he offers you to pay back the debt either today or one year from now. What would you choose? If you act in line with standard economic theory, you would choose to get the money back today.

The Lari Depreciation
03 February 2014

The value of a currency, measured in terms of other currencies, has consequences for the real economy. A more expensive lari, for example, makes it more profitable to import goods into Georgia. The importer has to pay the foreign goods with foreign currency, and when the lari is more valuable, fewer lari is needed to pay for them.

Looking Over the Border: The Pension Reform in Armenia
20 December 2013

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.

On Imitation, Forbidden Fruits, and Sour Grapes
13 December 2013

For many observers, the Georgian job market is a mystery. Companies are bitterly complaining about a lack of engineers, forcing them to withhold the expansion of production capacities and to cut down investments. Yet Georgian young people, who could make good fortunes by studying technical subjects, prefer to learn the law, business administration and the like, qualifications that are oversupplied in the market and on average do not yield high salaries.

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