Yerushalmi, Erez, Labadze, Lasha and Galdava, Irakli (2015) “You can’t always get what you want” : an optimal investment model for Georgia. Working Paper. Coventry: Institute of Employment Research; University of Warwick. ISET-PI Research Reports .

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Abstract

This is a tool for the Government of Georgia to assist in investment planning at both an aggregate (macro) level and also a detailed regional-urbanity level. We develop an economywide computable general equilibrium model of Georgia. Given a certain level of funding, the model searches for the optimal investment strategy that maximizes specific social-economic targets. These include: GDP and welfare growth, income equality, employment creation, export promotion, as well as others. The small open economy is calibrated to a newly developed dataset of Georgia that includes 15 production sectors and 20 regional-urbanity households. A given amount of money is donated from abroad, i.e., it does not create distortionary wealth effects. Funding is placed into a Development Fund that channels it towards different production sectors to generate investment and promote growth. This paper summarizes the model, and focuses on the best investments at a macro-level. Officials in the government, however, have been trained to analyze various other scenarios and issues that are not covered in this paper. Overall, the paper finds that it is not possible to maximize all the social-economic targets at once. Different targets require different allocation strategies. Simply put: You can’t always get what you want!

Item Type:	Working or Discussion Paper (Working Paper)
Alternative Title:	Optimal investment : ‘You can’t always get what you want'
Subjects:	H Social Sciences > HC Economic History and Conditions
Divisions:	Faculty of Social Sciences > Institute for Employment Research
Library of Congress Subject Headings (LCSH):	Public investments -- Georgia
Series Name:	ISET-PI Research Reports
Publisher:	Institute of Employment Research; University of Warwick
Place of Publication:	Coventry
Official Date:	November 2015
Dates:	Date Event November 2015 Published
Number of Pages:	53
Institution:	University of Warwick
Status:	Not Peer Reviewed
Publication Status:	Published
Funder:	Deutsche Gesellschaft für Technische Zusammenarbeit

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