The National Bank of Georgia publishes the next paper in its NBG Working Paper Series. The working papers aim to present research on topics relevant to central banks and economics profession. The papers are circulated to elicit comments and encourage debate on ongoing research. The Working Paper Series are coordinated by the Macroeconomic Research Division and focus on topics relevant for central bank policy, including macroeconomic modeling, monetary and exchange rate policies, financial stability, etc.

The next working paper in the series titled "Measuring Credit Gaps for Macroprudential Policy Guidance: An Application to Georgia" , was prepared by Akaki Liqokeli - Chief Specialist in the Macrofinancial Modelling and Analysis  Division of the Financial Stability Department at the NBG . The aim of this paper is to enrich the analytical toolkit of the macroprudential policy framework in Georgia. In order to ensure the resilience of the financial sector, it is of vital importance to have a reliable policy guide that can be used to detect the buildup of systemic risks and to design an optimal policy response. The analytical instruments introduced in this paper are intended to complement the credit-to-GDP gap recommended by the Basel Committee on Banking Supervision in guiding macroprudential policy decisions. The author proposes two alternative approaches to credit gap estimation, which are suited to the specific characteristics of the Georgian financial system. The approaches address the shortcomings of the Basel credit-to-GDP gap and offer more insightful and informationally efficient early warning indicators of financial stress.  

The working papers can be accessed at the following page.