ISET

ISET Economist Blog

A blog about economics in the South Caucasus.
Jun
19

Decriminalize Marijuana?

  According to a recent study, smoking marijuana for many years leads to a severe loss of intelligence: compared with people who did not consume cannabis, the IQ’s of smokers were lower by 13-38 points (Meier et al.: “Persistent cannabis users show neuropsychological decline from childhood to midlife”, PNAS 109, 2012). Moreover, after a long time of consumption, cognitive abilities and memory do not recover when smoking marijuana is eventually given up.  Recently, decriminalization of marijuana became a hotly discussed topic in Georgia. The opi...
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Jun
12

Stirring Trouble in the Georgian Banking Sector

  Who should be supervising the activities of commercial banks in Georgia? Currently this responsibility lies with the country’s National Bank. However, the Georgian parliament will soon be deciding on a new legislation, which, if passed, could take away the supervisory role from NBG and transfer it to an independent agency reporting directly to the prime minister. At the same time, the President of Georgia, Giorgi Margvelashvili vowed to veto the bill, if it is passed by the Parliament, citing economic concerns.  So, why does this particular p...
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Mar
06

What Can We Do about the Lari Depreciation?

  Unlike most commodities that are provided by private actors competing with each other, a currency is provided by a monopolist. The only institution that is allowed to produce laris is the National Bank of Georgia (NBG). The task of the NBG-monopolist is made difficult by various peculiarities that cannot be found in other markets. First of all, lari once injected into the economy are not consumed or used up. They remain in the economy “until the cows come home”, as they say in Scotland. This is starkly different to what we observe in most other ma...
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Recent Comments
Guest — Giorgi Bakradze
My reply should have got here, sorry
Friday, 06 March 2015 10:10 PM
Guest — megiddo02
True, of course you could question the validity of the assumptions I make. But just saying there is no data available does not inv... Read More
Friday, 06 March 2015 11:11 PM
Guest — Giorgi Bakradze
One can make assumptions based on existence of Russell's teapot. That wouldn't make these assumptions valid.
Friday, 06 March 2015 11:11 PM
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Mar
04

Lari Depreciation: Is a Financial Crisis on the Horizon?

The recent bouts of sharp lari depreciation caused much anxiety among the Georgian population, prompting fears of inflation, loan defaults, and bank failures, on the one hand, and the typically Georgian political speculations over “who is to blame”, on the other. In and of itself, a moderate lari depreciation is not necessarily a bad thing for the Georgian economy. It makes Georgia cheaper and more competitive relative to the rest of the world, reducing the current account deficit and carrying a promise of future investment and jobs. That said, a deep an...
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Feb
27

Making Sense of FDI Dynamics

Foreign direct investment (FDI) is critical to every developing county, and Georgia is no exception in this regard. Georgia wants to grow out of poverty and catch up with the economically more developed regions of the world – for this to happen, foreign resources are needed, in particular if the domestic savings rate is as low as in Georgia. Yet FDI is not only about the capital which is made available to the economy but also, and even more importantly, about trust foreigners have into the Georgian economy. It is one thing to make cheerful statements abo...
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Guest — RT
> Georgia counted profits generated by foreign-owned companies that were left within Georgia as FDI.That seems to be the correct w... Read More
Monday, 02 March 2015 7:07 PM
Guest — Mathias
Given your analysis, should we for the time being largely ignore FDI data as a relevant indicator for how Georgia is doing? A few ... Read More
Friday, 27 February 2015 2:02 PM
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Jan
23

Georgia’s Trade in 2014: Does Export Decline Suggest a Loss of Competitiveness?

According to the latest GEOSTAT figures, merchandize exports from Georgia decreased by 1.63% between 2013 and 2014. This is certainly not great news for the country, but does it imply that Georgian goods have become less competitive on the world market? Recent trade data suggest that this is not necessarily the case. The first thing to note is that much of the decline in exports is related to one particular activity – the re-exports of Georgian cars to Azerbaijan and Armenia. Beginning in 2009, this business has become a “cash cow”, capitalizin...
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Guest — Nino
Congratulations with the first piece, Lasha! The piece is very timely and encouraging!
Tuesday, 27 January 2015 2:02 PM
Guest — megiddo02
An overly optimistic piece. We see one of main "business models" of Georgia -- car reexports -- disappearing. 25% of Georgian expo... Read More
Sunday, 01 February 2015 3:03 PM
Guest — Y
The main argument the article is advancing is not that everything is going peachy in Georgia with regards to exports, but rather ... Read More
Tuesday, 03 February 2015 11:11 AM
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