The impact of external debt on inflation rate in Georgia

Keti Tskhadadze


The purpose of this paper is to analyze the impact of external debt on inflation rate in Georgia. As external debt plays significant role in country’s development it is important to examine the relationship between the levels of external debt and its impact on GDP development and inflation. For analyzing the correlation between the external debt, economic growth and inflation we use the data that goes back to 15 years. We use an empirical investigation in order to see how the effect of external debt on inflation varies with financial market development.


Currency risk, exchange rate, external debt, Georgia, inflation


Aghion, P., Bacchetta, P., & Banerjee, A. (2000). A simple model of monetary policy and
currency crises, European economic review, 44(4), pp. 728-738.

Bakradze, G., Billmeier, A. (2007). Inflation Targeting in Georgia: Are We There Yet? IMF working papers, pp. 10-15, WP/07/193.

Boschen, J., Weise, C. (2003). What starts inflation: Evidence from the OECD countries, Journal of Money, Credit and Banking, 35, pp. 323-349.

Catao, L., Sutton, B. (2002). Sovereign Defaults: The Role of Volatility, IMF Working Papers, pp. 2-12, WP/02/149.

Cecchetti, S., Mohanty, M., and Zampolli, F. (2011). The real effects of debt, Bank for International Settlements, 10(2), pp. 163-183.

Detragiache, E., Spilimbergo, A. (2001). Crises and liquidity: evidence and interpretation, IMF Working Papers, pp. 3-12, WP/01/2.

Domac, I., Yucel, E.M. (2005). What triggers inflation in emerging market economies? Review of World Economics, 141(1), pp.141-164.

Fischer, S. (1998). The Asian crises: a view from the IMF,, accessed February 4, 2019.

Khan, M.S., Senhadji, A.S. (2000). Threshold Effects in the Relationship Between Inflation and Growth, IMF working papers, pp. 3–17, WP/00/110.

Loungani, P., Swagel, P. (2001). Sources of inflation in developing countries, IMF working paper, pp. 3-14, WP/01/198.

Maana, L., Owino, R., and Mutai, N. (2008). Domestic Debt and its Impact on the Economy, 13th annual African econometric society in Pretoria, South Africa, pp. 2-20.

Maliszewski, W., (2003). Modeling inflation in Georgia, IMF Working Papers, pp. 3-10, WP/03/212.

Mannase, P., Roubini, N., and Schimmelpfennig, A. (2003). Predicting sovereign debt crisis, IMF working papers, pp. 3-8, WP/03/221.

Manasse, P., Roubini, N. (2005). “Rules of thumb” for sovereign debt crises., accessed February 4, 2019.

National Bank of Georgia. (2019.) Statistical data,, accessed February 11, 2019.

Petrovic, P., Nojkovic, A. (2010). Inflation triggers in transition economies: their evolution and specific features,,%20Mladenovic,%20Nojkovic%20(2011).pdf accessed February 4, 2019.

*** (2014) External Debt Statistics: Guide for Compilers and Users, IMF working paper, Washington, D.C.

Full Text: PDF

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.