Modeling Inflation in Georgia

Author/Editor: Maliszewski, Wojciech
Publication Date: November 01, 2003
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: 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.
Series: Working Paper No. 03/212
Subject(s): Inflation | Georgia | Transition economies | Economic models

Author's Keyword(s): Inflation | Transition | Georgia | Cointegration
Publication Date: November 01, 2003
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2122003 Pages: 22
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