Modeling Inflation in Georgia

23 Pages Posted: 14 Feb 2006

See all articles by Wojciech S. Maliszewski

Wojciech S. Maliszewski

London School of Economics & Political Science (LSE) - Department of Economics

Date Written: November 2003

Abstract

The paper explains the behavior of inflation in Georgia in the post-stabilization period. A long-run equation linking prices to money and the exchange rate, as well as a short-run, dynamic equation for inflation are estimated. The inflation equation is stable, points to a dominant role of the exchange rate in the behavior of inflation and shows a low persistence of inflation in Georgia. The equation explains well the behavior of inflation after the Russian crises, when inflation increased sharply but was quickly brought under control, as the National Bank of Georgia kept its monetary policy tight and the exchange rate stable.

Keywords: Inflation, Transition, Georgia, Cointegration

JEL Classification: E31, C32, P24

Suggested Citation

Maliszewski, Wojciech S., Modeling Inflation in Georgia (November 2003). IMF Working Paper No. 03/212, Available at SSRN: https://ssrn.com/abstract=880885

Wojciech S. Maliszewski (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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