Accommodating Monetary Policy in Transitional Economies: Particularities

This paper surveys the particularities of monetary policy as a powerful governmental weapon in countries with transitional economies. The paper combines the theoretical analysis with empirical studies. Because in transitional economies the particular channels of monetary policy are diverse, continually changing, and uncertain reduce-form evidence are used to evaluate the empirical evidence. The brief view of relationships between movement in money supply (M1 and M2) and output level (nominal GDP) in Georgia illustrates the close correlation between them. Georgian economy like others transitional economies suffers from “Great Transitional Depression†and macroeconomic equilibrium occurs at recessionary gap. In transition countries initially supply is more elastic and elasticity increases more rapidly than that in developed countries. In these circumstances expansionary monetary policy effects real aggregate economy stimulating economic growth with mild inflation. In industrialized countries accommodating discretionary monetary policy entails cost-push inflation without any change in long-run GDP.monetary policy, transitional economy, reduce-form evidence, long-run economic growth, inflation

Economic Growth in Georgia: Historical Perspectives and Prognosis

While output declined in virtually all transition economies in the initial years, the speed and extent of the recovery that followed has varied widely across these countries. The paper examines some aspects of transition experiences of 1990s and dynamics of GDP in Georgia during transition recession and following post-recession recovery. Economic growth is considered as complex and comprehensive phenomenon. The prognostic econometric model of Georgian GDP is developed.economic growth, GDP, transitional economy, Georgia, prognostic model, regression, non –linear trend

Small business in a small country and the role of government (the case of Georgia)

Problem statement: The value of small and medium-sized enterprises (SMEs) for a national economy is recognized all over the world. Georgia is not an exception. Georgian government has declared the importance of the creation of a strong private sector in strategic documents - “Socio-Economic Development Strategy of Georgia – Georgia 2020” (2014) and “For a Strong, Democratic and United Georgia” (2015), first of all. In line with country’s general strategy - to achieve economic growth through private sector development - more proactive reforms to develop entrepreneurship, start-ups and build a competitive SME sector have been developed and special program -“SME Development Strategy 2016-2020”- was adopted. Nevertheless, some challenging tasks still remain. The aims of the article are twofold. Firstly, to analyze Georgian SMEs contribution to the national economy in order to reveal the role of this sector, and following this reasoning, critically assess government policy towards SMEs after signing in 2014 the Association Agreement with the European Union. Research methods applied in the paper are quantitative and qualitative based upon a bottom-up approach that combines desk research and statistical data analysis provided by the National Statistics Office of Georgia, national researches and international organizations. Desk research consists of analysis of academic literature related to the topic. Media reports and interviews are used as additional sources. Main results/ Findings are as follows: nowadays Georgian SMEs contribution to the country’s economy is difficult to be assessed due to the new classification methodology applied by the National Statistics Office of Georgia, Georgian government policy toward SME is changing, Entrepreneurial education still remains a challenge, Neither educational programs are fully successful nor government provided effective training programs. Practical implication of the work: Recommendations for the policy decision-makers were developed in order to provide guidance to policy makers for formulating and adjusting policies and programs

FDI attraction : comparative analysis of the Baltic States and Georgia

The attraction of foreign direct investment (FDI) is usually an economic policy priority due to its positive effects on economic growth because of new capital and technology, higher employment, new management practices, improvements in the quality of services, as well as innovation and lower production costs. This paper aims to assess the investment climate in the Baltic states and Georgia and evaluate what are the appropriate FDI policy objectives and approaches there. It considers three international indices as measures of investment climate: Index of Economic Freedom, Corruption Perceptions Index, and Ease of Doing Business Index. The results suggest that all three international indices are useful in assessing investment liberalization, promotion and facilitation. This paper argues that FDI policy needs to consider country-specific characteristics: for countries above a certain threshold FDI attraction depends mostly on macroeconomic and external factors, while other countries need to focus on specific reforms to improve investment climate.peer-reviewe

Macroeconomic Policy: Going back to Origins?

Decline in public interest to "pure" economic theory is disturbing fact. This paper considers the main macroeconomic hypothesis through their implementation in practice - macroeconomic policies in the USA, in post-soviet countries (Russia and Georgia) and Turkey as well. Stabilization policy of these countries experiences that governments combine keynesian discretionary policy and classical rules. The so-called economic stabilization programs for Russia, Georgia and Turkey sponsored by the IMF have led to absolutely different and not always positive results. In particular, Russia overcame recession and financial crises of 1998 without IMF loan. Georgia now is looking for the new program. The programs were faulted because they did not take into consideration all peculates of post-communist economies. Most successful this program was in Turkey that has achieved macroeconomic stability and high rate of growth.Macroeconomic Policy, IMF Policy, Georgia, Turkey, Russia

Business valuation: classical and advanced methods

The topic chosen by the authors implies a qualitative rather than quantitative research approach. The aim of this paper is having assessed the value of a particular company using classical and advanced approaches to analyse the evaluation results obtained using different approaches and give recommendations to company managers. To achieve the aim, the following objectives were set: explore different views on the interpretation of the company as a subject of evaluation; analyse the major methods of assessing the value of companies; having gathered empirical data, assess the value of the particular company using classical and advanced methods; conduct a sensitivity analysis by considering factors that influence the valuation of the company. In the framework of this research, we used the key methods of assessing the value of company’s business, based both on classical approaches, such as income approach and comparative approach (market approach), and on more advanced and less studied methods, such as EVA and ROV. As a result, the possibility of using advanced methods based on economic added value and real options was demonstrated. The results obtained in the framework of various methods are comparable, and the differences indicate the need for further research in this field

Business Education in Georgia: Challenges and Opportunities

Knowledge-based society rests on the knowledge triangle that refers to the interaction between research, education, and innovation. The presented paper discusses efficiency of business education in Georgia. SWOT analysis and a questionnaire held by the author show challenges and opportunities of business education in Georgia.Knowledge-based society, business education, Georgia

The Political Economy of Monetary Integration in Transition Countries.

Monetary integration of developing and transition countries is considered as a monetary strategy for immunization against international monetary instabilities. This paper corresponds to the growing interest in the integration theory and its application to the EMU formation and to EMU enlargement. The paper shows a new level of understanding of the monetary integration issues that opens new opportunities for developing countries and countries with transitional economy to integrate in global economy through non-traditional method such as euroization. Advantages and disadvantages of euroization are analyzed.Monetary integration, Optimum Currency Area, transition countries, euroization.