Problems of macroeconomic stabilization in Georgia in the conditions of an open economy

Abstract

In the open economy control conditions, the government’s main concern should be ensurance of macroeconomic stabilization. One of real tools for achieving this goal is monetary and budgetary levers’ combination, in which strong fiscal stimuls should be merged with monetary policy, although herewith it requires tough coordination between government-led public and the National Bank’s monetary policies.

In addition, we have to note noted that monetary levers should be used to influence tax balance, while fiscal policy should be oriented only on regulation of aggregate demand. Cutting taxes and decreasing government spending is essential to stimulate production in Georgia, as well as increasing research funds and developing effective system for qualification growth.