Inflation and some directions of improvement in its management - regulation (ინფლაციის რეგულირების სრულყოფის საკითხისათვის)
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Date
2021
Journal Title
Journal ISSN
Volume Title
Publisher
Ivane Javakhishvili Tbilisi State University Press
Abstract
Despite the severity of the problems facing the Georgian economy, the
recent inflationary processes deserve special attention. Activation of the fight
against inflation implies the study-analysis of the legal framework regulating the
functioning of the monetary-credit system of the country.
In the light of the foregoing in the first part of the work based on estimation
of the key macroeconomic parameters stimulating inflation, in particular: the Real
Gross National Product, the aggregate budget balance, foreign investitions, the trade deficit, and the actual M2 Money Stock and trends estimated parameters,
and the estimates made based on the Irving Fisher’s Equation of the Theory
of Money, and the conclusion(s) made upon complex analysis of the inflation
targeting legal regulatory norms, improvement of the existing practice (including
existing legal base) of management/regulation of inflatory processes is regarded
as an urgent objective.
Based on all of the above, and a number of other factors, in the final part
of the article recommenations are provided to improve the efficiency of inflation
regulation/management. In particular:
- taking into account peculiarity of the Georgian language and adequate
definition of economical essence of inflation in the legal acts, evaluation of
performance of the National Bank with unambigious and objective criteria, it is
deemed expedient to replace the term “Target Inflation Value” in the regulatory
legal acts of the National Bank with “Inflation Threshold”;
- in order to ensure operativness, necessary in effective management of
the inflatory processes and effective parliamentary control over the operation
of the National Bank, the esablished existing criterion for evaluating inflation is
deemed expedient to be replaced with the criterion of the excess of the actual
annual inflation rate over the inflation rate defined by parliamentary decree of
the same year;
- if the actual annual inflation rate exceeds the inflation rate of that year,
defined in the decree of the Parliament of Georgia, it is regarded to be a duty of
the national parliament to discuss the issue of responsibility of the President of
the National Bank.
Description
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Keywords
Target Inflation Value, ways to improve inflation management/ regulation (including the legal base), responsibility of the National Bank
Citation
Economics and Business, №4, 2021, pp. 97-118