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ISET Khachapuri Index

ISET Khachapuri Index. Inspiration. Aim - design a way of tracking inflation using the simplest and the most robust consumer basket that would appeal to everybody. Inspiration. “Big Mac Index” of The Economist.

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ISET Khachapuri Index

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  1. ISET Khachapuri Index

  2. Inspiration • Aim - design a way of tracking inflation using the simplest and the most robust consumer basket that would appeal to everybody.

  3. Inspiration • “Big Mac Index” of The Economist. • This particular index is used to measure the purchasing power parity between any two countries by comparing the price of a "standard" good – the Big Mac hamburger – that is identical across countries • Similar index – but to trace inflation and the cost of living

  4. Why Khachapuri? • “The most common meal in Georgia?”- Khachapuri • The pride of local cuisine • Produced and consumed by practically every family regardless of its ethnicity

  5. Khachapuri Index usage • Analytical purposes: • Cost of living across space and time • Changes in the terms of trade • Impact of global commodity prices • Seasonal fluctuations in demand • Seasonal fluctuations in agricultural supply • Market structure

  6. Kh-Index “Basket” Cheese Yeast Price of Energy (gas, electricity) • Cons • exclusion of other important consumer goods • Pros • Simplicity • Transparency Butter Eggs Flour Milk

  7. Kh-Index Methodology • First Tbilisi Survey - August 2008 • Three major open markets in Tbilisi (so called “Bazari”) • May 2011 - survey expanded: • Kutaisi • Batumi • Telavi Kutaisi Gori Batumi Telavi Tbilisi

  8. Index compilation method • Interview 5 sellers of every item in the Khachapuri basket • Calculate the average cost of cooking one portion of Khachapuri in different cities • Calculate the minimum and maximum prices of one Khachapuri portion

  9. Index Calculation Techniques • Calculate following indices for each city and the country as a whole: • Khachapuri Index (Kh-Index) • Frugal Housewife Khachapuri Index • Monthly Kh-Index inflation • Annual Kh-Index inflation

  10. Explanatory PowerKh-Index vs. CPI

  11. Explanatory Power Kh-Index vs. Food CPI

  12. Frugal Housewife Kh-Index

  13. Kh-Index comparing cost of living

  14. Khachapuri and The Economist Pancake Index

  15. Kh-Index in The Financialhttp://www.financial.ge/pdf/ePaper.pdf • Since June 2011 - Kh-Index column in The Financial on a weekly basis • 63 column published • Two main sections in each: • Kh-Index analysis • “Economic lesson of the week”

  16. Economic lessons of the week • Labor migration and remittances to Georgia • Farmer cooperation, the Nikozi experiment assessed

  17. Economic lessons of the week • No money, no venture, no gain in Georgia’s agriculture • Georgian driving manners and economic competitiveness

  18. Economic lessons of the week • IMF monetary policy prescriptions in action

  19. Economic lessons of the week • How rich Georgia really is?

  20. Economic lessons of the week • Are Georgian village communities able to organize themselves? • The Case Of Shrosha

  21. Thank you

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