ISET

ISET Economist Blog

A blog about economics in the South Caucasus.
Dec
08

Lari Winter Blues – Should We Worry?

In the past two weeks Georgians have been waking up with a sense of déjà vu. In a matter of days, the Georgian currency lost over 8% of its value against the US dollar, and reversed the course of appreciation against the euro. The lari winter blues are reminiscent of the last months of 2013, when, after a long period of stability, the lari lost about 5% of its value against the dollar in the course of ten weeks. The current episode of sudden depreciation sent ripples of worry through the Georgian society and prompted opposition parties to sharply critic...
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Guest — George
I think it is great for ISET to put this all in perspective. Funnily enough, you pipped me the post as I was considering writing a... Read More
Wednesday, 10 December 2014 9:09 PM
Guest — George Welton
I think it is great for ISET to put this all in perspective. Funnily enough, you pipped me the post as I was considering writing a... Read More
Wednesday, 10 December 2014 9:09 PM
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Jun
13

The Economics of Prostitution

When thinking of “market distortions” we typically imagine government regulations, taxes and subsidies that prevent market mechanisms from achieving an optimal outcome. For example, if you pay $100 for a 30-minute taxi ride (as is the case in many European capitals), you can easily relate it to a government regulation requiring all taxi drivers to be licensed (at a very high cost). In the absence of such a requirement many more drivers would be able to enter the taxi driving profession, increasing supply and reducing prices. However, the government is no...
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Guest — Saba
First of all thank you for your comment. So you mentioned about possibility of increased demand, I agree that it might "activate" ... Read More
Sunday, 15 June 2014 6:06 PM
Guest — Simon Appleby
Legalisation of prostitution in many Australian states lead to a huge increase in demand; once it was no longer unlawful to be a c... Read More
Saturday, 14 June 2014 11:11 AM
Guest — Saba
The same arguments can be applied to men's prostitution as well. However, to be honest I talked only about women's prostitution be... Read More
Monday, 16 June 2014 10:10 AM
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Jun
02

Pawnshop Mentality

“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. According to a survey of GeoStat (which accounts for all figures provided in this article), in 2013 the annual interest rate on pawnshop loans was 54,1%. For loans denomi...
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Guest — Helene Ryding
Makes microfinance look cheap doesn't it?
Monday, 02 June 2014 5:05 PM
Guest — Eric Livny
What about a typical pawnshop loan term? I would think that people use pawnshops ("lombardi") in an emergency for extremely short-... Read More
Tuesday, 03 June 2014 8:08 AM
Guest — Maya G.
You are right Eric, but in some cases "lombards" are the only source for financing HHs needs and not for only short-term. Rural po... Read More
Thursday, 12 June 2014 3:03 PM
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May
05

The Mystery of the Russian Economy (Part 2)

For a long time Russia was seen as the land of opportunity for foreign investors. The allure of the country with large population, vast natural resources, and more importantly, a large middle class willing to spend money, was irresistible. The burgeoning economy, however, held a few secrets which threatened to derail investors’ hopes. Last week we started to discuss the ‘bear traps’ or structural inefficiencies built into the economic system in Russia. In particular, the rent management system in the Soviet Union centered around the idea of indirect reso...
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Guest — Eric Livny
I've lived in Russia from 1993 till 2007 and have seen it rising from the ashes. The most basic issue in Russia's economic resurre... Read More
Monday, 05 May 2014 12:12 PM
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Apr
28

The Mystery of the Russian Economy

Until very recently Russia was considered by many foreign companies a somewhat difficult but promising country for investment, a “land of opportunity” that perhaps necessarily came with a hefty dose of a “riddle wrapped in mystery inside of an enigma”. The difficulty was stemming primarily from Russia’s heavy-handed bureaucracy. Stories of corrupt practices, politically motivated court decisions and questionable tax authorities’ tactics abounded. While this may have scared off smaller investors, the large companies are typically no strangers to such chal...
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Guest — NP
Looking forward to read the follow up!
Monday, 28 April 2014 11:11 AM
Guest — RT
An interesting chart here http://www.echo.msk.ru/blog/ksonin/1300976-echo/
Monday, 28 April 2014 7:07 PM
Guest — Y
Great reference, thanks, RT! An interesting sentence in that blog from April 15th was "Putin understands this, and will soon sta... Read More
Tuesday, 29 April 2014 3:03 PM
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Mar
17

"Inclusive Growth" Policies: Roads Paved with Good Intentions

The recently published government strategy “GEORGIA 2020” aims “to ensure that the majority of Georgia’s population benefits from economic growth”. The natural million-dollar question, however, is how this “inclusive growth” objective could be achieved in reality. In other words, how to make sure that the economy grows while creating jobs and business opportunities for the poor. Before delving into this “how” question, let’s state the obvious trade-off: efforts to achieve inclusivity by means of aggressive income redistribution (e.g. increased social ben...
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Guest — Florian Biermann
Governments are generally bad entrepreneurs. If the government refrains from pushing large-scale economic projects with public mon... Read More
Tuesday, 18 March 2014 12:12 AM
Guest — Philippe
The underlying issue raised by this post is actually the capacity to co-ordinate different logics of intervention: the economic an... Read More
Tuesday, 18 March 2014 2:02 PM
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