Time for a new discourse
Fatih Özatay, PhD
03 September 2009
I still do not understand how Turkey will at least grow by a rate close to historical growth rate of 4.5 -5 percent in the couple of years ahead. And I guess this is not my fault since we do not have a credible economic policy yet. If we had one, I would try hard to understand why. Turkey's Transition Program implemented after the 2001 crisis proposed a coherent framework: to rescue banking sector which is about to get drawn; to discipline the unsustainable fiscal policy and reduce public debt; to implement floating exchange regime as a shock absorber and ensure monetary discipline; to restructure and strengthen the economic institutional structure to protect the economy from similar problems in the future.
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Immediate cost of not signing an agreement with the IMF is reflected in unemployment figures
Güven Sak, PhD
03 September 2009
Have you read the news analysis on Turkey recently published in New York Times (NYT)? The analysis emphasized that Turkish government, who made a bet by not signing an agreement with the IMF, so far seemed to win. The emphasis was put on "so far"; but the news hit the headlines in particular in certain media. As the news analysis suggested, exchange rate did not jump as high as expected; interest rates decreased and the Istanbul Stock Exchange has risen to record-high levels. Thus, the government has won the bet. NYT's analysis also reflected successfully the fact that economic paradigm change was acknowledged completely not only in Turkey but also in the rest of the world. Remember all the commentaries we wrote with the "concepts are not the same anymore" focus. In 2008, we said several
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Change of era in Japan
Güven Sak, PhD
01 September 2009
What is expected happened. Liberal Democrats that have been ruling the country for almost five decades lost the elections in Japan. Now, Democratic Party of Japan will rule the country. In 2005, Liberal Democrats headed by former Prime Minister Junichiro Koizumi won the victory. Now, Democratic Party of Japan achieved a huge success: it took 308 out of 480 seats. In fact, expiry date of Liberal Democrat Party (LDP) had long passed. But it took a decade for the known one to become true. Why? When in the United States of America (USA) the office was taken over from Republicans to Democrats, we did not interpret the issue as "the economic crisis is shaking ruling parties". Republicans had more than one reasons to leave the office. So, can we put forth the same argument in the case of Japan? I
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Fiscal rule and independence
Fatih Özatay, PhD
31 August 2009
There is a vast literature for the economic policies implemented for politic purposes and the results of those policies. Numerous theoretical studies have been conducted in this field. In addition to this, the relation between the practical results and developed theories has been investigated intensively. Common findings of studies that are widely known and that thus turned into 'classics' in this field is:
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Possible theoretical developments
Fatih Özatay, PhD
30 August 2009
In the upcoming period, feverish endeavor is ahead economists. In particular in macroeconomics, new models are possible to be developed. In some macroeconomic models, financial sector does not take place even as a detail. Considering what the earthquake in financial sector put world through, this approach must lose ground.
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We are definitely among the top ten in Facebook
Güven Sak, PhD
29 August 2009
The people of this region have an endless passion for being at top. It is always important to be THE first, at least to be among the top five or in the worst case among the top ten. I do not know the reason, but this is correct. The 'we have the seventeenth biggest economy of the world' talks also originate from this passion. We are the sixth biggest economy among European economies. We would like to present a ranking for those who like to ask "So, how do we rank?" we have to say that Turkey seems to rank very well in the popular website Facebook. We are definitely in the top ten. Today, let us think through what this means. Is it something good or bad?
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Crises and insolvent banks
Fatih Özatay, PhD
27 August 2009
There are numerous rumors about when exactly the global crisis emerged. There are people that assume it as the end of 2006 as well as August 2007, as FED Chairman Bernanke argued in the speech he delivered six days ago. However, there is a consensus that the crisis peaked in September 2007. Let us recall what has happened:
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What is the milieu while Bernanke is re-assigned
Güven Sak, PhD
27 August 2009
FED Chairman Bernanke will pursue his duty for another period. Bernanke was an academic that studied on Great Depression period of 1930s. Now in the period of a new economic recession emerging eight decades after the Great Depression, he plays a key role in the design and implementation of economic policies. What can we say? Such is life. A fortunate person is that who undertakes responsibilities on an issue he/she get prepared for throughout his/her life, is not he/she? Therefore, Ben Bernanke is a fortunate person. Given that the issue he has been elaborating on for years have recently begun to affect our lives adversely, he holds the position to carry into affect what he has been thinking on for years and to lead us. How happy! But, what should the re-assigning of Bernanke make us think
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Production loss
Fatih Özatay, PhD
24 August 2009
I also mentioned recently; in abnormal periods, it is not enough to evaluate the changes in production in comparison solely with the same period the year before. In addition to this, it is necessary to consider the loss of production over the period where production peeked and bottomed. This way, the loss incurred by the crisis becomes more apparent.
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Again on tax cuts
Fatih Özatay, PhD
23 August 2009
Here comes another commentary on the developments in automotive sector as it became a tradition following the special consumption tax (SCT) cut decision introduced in March for some sectors. I have been writing on this topic every month mainly because: budget resources did not allow us to do much against the employment and production reducing impacts of the global crisis. However, it was obvious that there was also a need for domestic demand boosting policies. In that case, the reasonable option was to direct limited budget sources to areas that can boost production to the highest level possible.
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