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ISET Economist Blog

A blog about economics in the South Caucasus.
Feb
21

Lending by Georgian Banks Boosts Savings and Provides Shelter from Relatives in Need

Georgian households, being as poor as they are, don't save enough for the rainy day. Do low savings imply that Georgians are impatient to consume and do not care about their future? Is it in our genes that we prefer today’s egg to tomorrow’s chicken? Maybe our history, the history of a small nation struggling for survival, taught us to live our lives one day at a time? Let’s face it: while culture may definitely play a role in people’s attitude to saving (an issue to which we will come back in the second part of this article), the vast majority of G...
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Guest — eteri
Article is provocative; however some statements and ideas are not being grounded in the economic literature and data. Few observat... Read More
Friday, 21 February 2014 4:04 PM
Guest — Zak
I agree with the comment above and would add this looks like not just any middle income Georgian, but also quite a young one. In t... Read More
Friday, 21 February 2014 11:11 PM
Guest — Eric
Eteri's point was about the first sentence (which we've changed in the meantime). The original version could have been misundersto... Read More
Saturday, 22 February 2014 12:12 AM
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Feb
03

The Lari Depreciation

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, less lari are needed to pay for them. Driven by competition, importing companies will forward some of this cost reduction to the consumers and charge lower prices for imported goods. At the same time, an appreciation of the lari puts a burden on exporters. A bottle...
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Jan
31

The Fight of the Century

Fight of the Century? Well, that was Joe Frazier against Muhammad Ali, New York 1971, right? Wrong! For an economist, the Fight of the Century refers to the intellectual debate between the illustrious economists John Maynard Keynes (1883-1946) and Friedrich August Hayek (1899-1992). A battle at least as hot as the boxing fight, if not even much hotter! What was this all about? And does it have to do anything with Georgia? It does… A LACK OF DEMAND… What are the causes of recessions and unemployment? Keynes had a very clear idea about this. During a slump...
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Guest — Eric
Leqso, you may enjoy reading some of the 20th century Marxists, e.g. Rosa Luxembourg, whose analysis of capitalism going global (a... Read More
Saturday, 01 February 2014 10:10 AM
Guest — Eric
LSE is now offering an interdisciplinary MA in economics and philosophy http://www.lse.ac.uk/philosophy/degrees/mscep.aspx?revolut... Read More
Saturday, 01 February 2014 10:10 AM
Guest — Florian
Leqso, you say that capital outflows are not the reason for the lari depreciation. Did the imports increase also when measured in ... Read More
Monday, 03 February 2014 9:09 AM
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Dec
23

The Educational Choices We Make...

Like many, I like having more choice, but hate making choices. As a result, many of the most important choices in my life, including the choice among alternative partners, have been made for me by … others. A 2010 New York Times article Too Many Choices: A Problem That Can Paralyze describes the findings of an experimental study by Sheena Iyengar, a Columbia Business School professor, which suggests that the problem of choice is indeed much more complicated than the standard textbook “truth” we are teaching ISET economics students. Here is how the experi...
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Guest — Lasha
Just love Introduction. From that convincing example, it is clear that with so many options to choose from, people find it very di... Read More
Monday, 13 January 2014 7:07 PM
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Dec
13

On Imitation, Forbidden Fruits, and Sour Grapes

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 law, business administration and the like, qualifications that are oversupplied in the market and on average do not yield high salaries. Young Georgians, lacking information on what sells well in the job market, apply a simple decision rule ca...
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Guest — Jeff
Have you read Thinking Fast and Slow?
Friday, 13 December 2013 8:08 AM
Guest — Zak
Interesting, especially the visualization. The argument has been round for quite some time now, however, what I have not thought a... Read More
Friday, 13 December 2013 9:09 AM
Guest — Florian Biermann
One should not take the graph too seriously. It is obviously not a scientific article and not a scientifc diagram. Our diagram is ... Read More
Friday, 13 December 2013 2:02 PM
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Nov
18

Georgia Riding the Waves of a Political Business Cycle

In our last week’s article we examined Georgia’s economic growth in the 12 months before the 2012 parliamentary elections.  In particular, we reviewed the popular argument that much of this economic growth was driven by the “political business cycle” effect of public (over)spending prior to the elections. Our analysis showed that the construction sector (the prime suspect for politically motivated spending) did in fact exhibit an atypical growth pattern just before the elections, and that growth rates in construction collapsed right after October 20...
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