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Inflation Targeting Turns Ten in Georgia: Assessment of the Experience
Název práce v češtině: Inflation Targeting Turns Ten in Georgia:
Assessment of the Experience
Název v anglickém jazyce: Inflation Targeting Turns Ten in Georgia:
Assessment of the Experience
Akademický rok vypsání: 2015/2016
Typ práce: diplomová práce
Jazyk práce: angličtina
Ústav: Institut ekonomických studií (23-IES)
Vedoucí / školitel: PhDr. Jaromír Baxa, Ph.D.
Řešitel: skrytý - zadáno vedoucím/školitelem
Datum přihlášení: 16.06.2016
Datum zadání: 16.06.2016
Datum a čas obhajoby: 31.01.2018 08:30
Místo konání obhajoby: Opletalova - Opletalova 26, O206, Opletalova - místn. č. 206
Datum odevzdání elektronické podoby:03.01.2018
Datum odevzdání tištěné podoby:05.01.2018
Datum proběhlé obhajoby: 31.01.2018
Oponenti: PhDr. Mgr. Jiří Kukačka, Ph.D.
 
 
 
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Zásady pro vypracování
Motivation:
Inflation targeting was first introduced by New Zealand in 1990; thereafter number of developed and emerging markets followed its lead. Statistics show that none of the countries has dropped this policy. As it has been successful monetary policy for developed countries, many people deem IT is a panacea for their economy, others claim that less developed countries are not ready yet. It was debatable topic even in USA until 2012, when U.S. Federal Reserve Chairman Ben Bernanke set a 2% target inflation rate, bringing the Fed in line with many of the world's other major central banks.

Georgia introduced IT in 2009. It is country with political and economic instabilities, highly dependent upon exogenous factors. As opposed to developed countries (New Zealand, Canada, UK), who wanted to lock the low inflation rate after disinflation period, Georgia was facing growing inflation rate. Thus, IT should have been a tool to at first lower and then lock inflation rate. Since 2009, there has been constant debate, whether it was right to change monetary policy and implement IT, because in 2011 inflation peaked 14%. Despite sluggish decline, NBG managed to maintain it at around 6%, in February 2016 they announced 3 year plan which means, for 2018 Georgia should have at around 3% inflation. I would like to examine Georgia's "journey" through IT, what transpired, what were the implications and whether IT is successful in less developed countries.

Research qustions:
1. Are less developed countries ready for inflation targeting?
2. Is inflation targeting successful in less developed countries?
3. Does it support stable economy?


Methodology

I will, in the first place, collect previous meta and empirical analyses (Frederic S. Mishkin 2000), gather data from National Bureau of Statistics and National Bank of Georgia. I endeavor to examine the manner whereby central banks developed in other countries with emerging markets, their road to inflation targeting, how they evolved and what were the implications after adoption. Thereafter, I will compare steps thereof to Georgia’s actions (Giorgi Bakradze, Andreas Billmeier 2008).
In order to assess success rate of IT as a new monetary regime, I want to observe inflation persistence and its dynamics; whether it supports the main idea of Central Bank of Georgia – i.e., price stability.

Expected contribution

Inflation targeting has given rise to heights of debates for more than two decades. Number of papers summarizes advantages and merits of new monetary policy. However, vast majority of them focus on already developed or emerged markets.
Dearth of scientific research on wider consequences of inflation targeting on developing economies eventuates in insufficient understanding of foregoing policy. Influence thereof on such economies is in a need of further exploration.
Georgia adopted new policy right after the armed conflict against Russia in 2008. The country faces constant instabilities: change of government in 2012, new policies, and currency crisis in 2015. Consequently, topic will be very challenging, as the country lacks expertise on the policy at issue and the present paper will attempt to provide new insights on this matter.
Seznam odborné literatury
Inflation targeting: lessons from international experience
Ben S. Bernanke, Thomas Laubach, Frederic S. Mishkin, & Adam S. Posen 2001

INFLATION TARGETING IN EMERGING MARKET COUNTRIES Frederic S. Mishkin 2000

Inflation Targeting in Georgia: Are We There Yet?
Giorgi Bakradze, Andreas Billmeier 2008

How successful inflation targeting has been? FRBNY ECONOMIC POLICY REVIEW / AUGUST 1997

The scope for inflation targeting in developing countries. Paul R. Masson, Miguel A. Savastano, Sunil Sharma 1997



Předběžná náplň práce
1. Introducing of inflation targeting: I will review the advantages and disadvantages of inflation targeting
2. Road to inflation targeting: Monetary policy in Georgia before 2009, how Central Bank developed and prepared for implementing inflation targeting
3. IT as monetary regime: I will examine activities of Central Bank after implementing inflation targeting, small statistical review of current economy and Central Bank‘s new plan
4. Other experiences: I will review how other emerging markets are evolving
5. Empirical analyses: I will explain how the data was collected and methods of my estimated model
6. Results: I will discuss the results of my analysis
7. Remarks
 
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