BOOK OF DOCTOR OF ECONOMICS MERAB KAKULIA “PROBLEMS OF CURRENCY SYSTEM DEVELOPMENT IN GEORGIA” (RESUME)

Dr. GOCHA TUTBERIDZE

The reviewed book of Doctor of Economics Merab Kakulia, “Problems of currency system development in Georgia” constitutes an exception as many difficult issues of Georgian currency system are not considered as abstract theoretic construction, but rather as integral part consisting of numerous elements and interconnections.

The definition “Foreign currency” is based on Kakulia’s analysis of the existing reality. He was the first to discover the point on which this definition would be based. He writes: “Definition of foreign currency implies legal means of payment, banknote, coins, bank balance that is sold and purchased outside the issuing country “.
The whole book, all of its chapters and paragraphs can be viewed as a rare example of the synthesis of theoretical and historical-empirical approach. Abstract, non historical modelling remote from practice is unfamiliar for the author. It becomes especially obvious when one reads author’s estimations of reasons triggering currency crisis in Georgia in 1998-1999. Mr. Kakulia gives original and convincing description of main reasons of crisis by using statistical, actual and deductive methods in an adequate way.
To researcher’s opinion, the currency crisis in 1998-99 consisted of two phases. The first one (September-December 1998) developed in accordance with the classic scheme of crisis disease known as spillover effect in economical literature (Financial crisis of Russia in 1998 G.T).
The second phase of the crisis (January-May 1999) developed in the conditions of floating rate. In the second phase, negative effect of monetisation of payments balance and great currency funds for covering budget deficit was not neutralised. Here we should pay attention to author’s calculations, charts, etc. that he uses for proving his scientific assumptions. Author’s ability to make logical charts and convince readers in their correctness deserves much respect.
The book suggests that in the conditions of floating exchange rate currency fluctuations are determined not only by fundamental economical factors, but also by psychological environment and subjective estimation of market operators – things that are not often paid due attention.