On Complex Inflation Targeting and Modified Inflation Indicators (Experience of Georgia)

Papava, Vladimer; Чарая, Вахтанг

doi:10.26794/2587-5671-2019-23-3-16-34

Cited by 3 publications

(1 citation statement)

References 16 publications

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“…The "complex inflation targeting" regime in monetary policy, which gives concurrent consideration to the targeting indicators of inflation and imflation, became much more flexible than the inflation targeting regime and provides clearly better outcomes, especially for the import-dependent developing countries (Papava & Charaia, 2019).…”

Section: Responding the Challengementioning

confidence: 99%

On Supply-Side Inflation and Some Unconventional Indicators for Measuring Inflation

Charaia,

Papava

2023

IBES

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The paper provides an analysis of the inflation problem caused by the COVID-19 pandemic and continued by Russia’s war against Ukraine, through different channels, including global supply chain disruption, increased governmental spending, decreased supply of goods and, etc. Inflation, which in this case was supply-side driven inflation, caused serious debates in terms of how to tackle the challenge. Should central banks use their standard instruments and is it enough to use the old-fashioned inflation index to create an economic recovery and anti-inflationary policies for different countries, especially when speaking about import-dependent, consumer-style developing countries? Herein, we analyze the most recent challenges of the inflationary process, starting from the point of how it launched and finishing with the issue of how to overcome this current crisis. Some unconventional macroeconomic indicators are also offered for governments and central banks for a better and more in-depth understanding of inflation and for the creation of better policy vis-à-vis inflation.

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Section: Responding the Challengementioning

confidence: 99%

On Supply-Side Inflation and Some Unconventional Indicators for Measuring Inflation

Charaia,

Papava

2023

IBES

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On the Reflection of Coronomics in Economic Science and Economic Policy

Papava¹

2020

Globalization&Business

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The paper discusses the economic issues of the COVID-19 pandemic. The resulting coronomic crisis is not a typical economic crisis since the coronomic crisis was not formed in the economy itself but is the result of the inability of medicine to solve the pandemic problem. The coronomic crisis is, by its very nature, an atypical economic crisis and is fundamentally different from other atypical economic crises that took place in the XX century. The coronomic crisis put the issue of the “crisis of globalization” on the agenda. The coronomic crisis exposed the weaknesses of globalization. Overcoming the COVID-19 pandemic is possible exclusively at the global level. The paper shows that the current process of de-globalization is “forced” by its nature and it will definitely be replaced by a qualitatively renewed process of globalization. Economic recovery from the corona crisis will be most successful only on the basis of the adherence to a free trade regime. In economic science, the problem of government intervention in the economy, especially during the pandemic and the post-pandemic period, is still relevant. The corona crisis has clearly confirmed the inability of inflation targeting to achieve macroeconomic stability. The coronomic crisis requires two approaches to economic policy. In particular, we mean an anti-crisis economic policy and a post-crisis economic policy. Economic incentives provided by the government to businesses contribute to the zombieing of the economy which will be one of the most difficult problems of the post-crisis period. The coronomic crisis made the issue of the economic security of each individual country even more urgent. The problem of ensuring food security is equally important. The economic policy of the post-crisis period must necessarily include measures to ensure a country’s food security. Since the possibility of a repetition of a pandemic in the future is similar to the current one, the problems of coronomics should remain in the field of study of economists for many years.

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Does Inflation Targeting Work in Emerging Countries? An Example of Georgia

Tkeshelashvili¹,

Lemonjava²

2020

Globalization&Business

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Monetary policy is the macroeconomic policy that allows central banks to influence the economy. It involves managing the money supply and interest rates to address macroeconomic challenges such as inflation, consumption, growth and liquidity. Historically, for a long time, the task of monetary policy was limited to controlling the exchange rate, which in turn was fixed (at the beginning of the 20th century on the gold standard) for the purposes of promoting international trade. Eventually such a policy contributed to the Great Depression of the 1930s. After the depression, governments prioritized employment. The central banks have changed their direction based on the relationship between unemployment and inflation, known as the Phillips curve. They believed in the link between unemployment and inflation stability, which is why they decided to use monetary policy (putting money into the economy) to increase total demand and maintain low unemployment. However, this was a misguided decision that led to stagflation in the 1970s and the addition of an oil embargo in 1973. Inflation rose from 5.5% to 12.2% in 1970-1979 and peaked in 1979 at 13.3%. Over the past few decades, central banks have developed a new management technique called «inflation targeting» to control the growth of the overall price index. As part of this practice, central banks are publicizing targeted inflation rate and then, through monetary policy instruments, mainly by changing monetary policy interest rates, trying to bring factual inflation closer to the target. Given that the interest rate and the inflation rate are moving in opposite directions, the measures that the central bank should take by increasing or decreasing the interest rate are becoming more obvious and transparent. One of the biggest advantages of the inflation targeting regime is its transparency and ease of communication with the public, as the pre-determined targets allows the National Bank›s main goal to be precisely defined and form expectations on of monetary policy decisions. Since 2009, the monetary policy of the National Bank of Georgia has been inflation targeting. The inflation target is determined by the National Bank of Georgia and further approved by the Parliament. Since, 2018- 3% is medium term inflation target of National Bank of Georgia. The inflation targeting regime also has its challenges, the bigger these challenges are in developing countries. There are studies that prove that in some emerging countries, the inflation targeting regime does not work and other monetary policy regimes are more efficient. It should be noted that there are several studies on monetary policy and transmission mechanisms in Georgia. Researches made so far around the topic are based on early period data. Monetary policy in the current form with inflation targeting regime started in 2009 and in 2010 monetary policy instruments (refinancing loans, instruments) were introduced accordingly, there are no studies which cover in full the monetary policy rate, monetary policy instruments and their practical usage, path through effect on inflation and economy. It was important to analyze the current monetary policy, its effectiveness, to determine the impact of transmission mechanisms on the small open economy and business development. The study, conducted on 8 variables using VAR model, identified both significant and weak correlations of the variables outside and within the politics like GDP, inflation, refinancing rate, M3, exchange rate USD/GEL, exchange rate USD/TR and dummy factor, allowing to conclude, that through monetary policy channels and through the tools of the National Bank of Georgia, it is possible to have both direct and indirect (through inflation control) effects on both, economic development and price stability

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On Complex Inflation Targeting and Modified Inflation Indicators (Experience of Georgia)

Cited by 3 publications

References 16 publications

On Supply-Side Inflation and Some Unconventional Indicators for Measuring Inflation

On Supply-Side Inflation and Some Unconventional Indicators for Measuring Inflation

On the Reflection of Coronomics in Economic Science and Economic Policy

Does Inflation Targeting Work in Emerging Countries? An Example of Georgia

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