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    A valuable discussion
    Fatih Özatay, PhD 05 June 2012
    Here is the main question:  how can the CBT implement a monetary policy that targets price stability and financial stability at the same time. The June 2012 issue of the journal İktisat İşletme ve Finans (Economics, Business and Finance) has a theme that was frequently addressed and discussed at this column for the last two years. Here is the main question it asks:  how can the CBT implement a monetary policy that targets to simultaneously attain price stability and financial stability. I would like to repeat why this critical question is raised: before the global financial crisis, many market economies had concentrated monetary policy efforts on price stability. It was thought that, price stability with a disciplined fiscal policy would automatically ensure financial stability. And a clim [More]
    Imports and GDP growth
    Fatih Özatay, PhD 02 June 2012
    There is strong evidence that the downturn has not stopped in the fourth quarter as argued by officials and that the slowdown has been continuing. On Thursday, foreign trade statistics for April were announced. I will evaluate import figures in reference to the estimates for 2012 growth. Pace of increase in total imports has been decreasing since September 2011. In the last three months, imports decreased year-on-year. There appears a similar trend in non-energy exports, as well. The only difference is that year-on-year drop in non-energy imports has been continuing for the last five months. Sub-components of imports depict a picture alike where the drop in April is stronger than that in previous months for all of the three sub-components of imports. In addition, it is seen that the annual [More]
    The dangers of filling the “leisure time”
    Fatih Özatay, PhD 31 May 2012
    Addressing the leisure time issue with the wrong perspective and devising policies accordingly can harm the quality of education in Turkey which is already low. The agenda on the “leisure time” of teachers can prove both constructive and destructive depending on the context of the debate. The constructive point of view was that I handled on Tuesday: a part of the summer holiday can be allocated for trainings tailored to improve the quality of teachers. On the other hand, it can be extremely harmful to assume that the leisure time of teachers especially during the academic year is “leisure” in the strict sense of the word and to develop policies accordingly. The short-cut evidence to this is the case with academics teaching at universities. [More]
    Teachers and leisure time
    Fatih Özatay, PhD 29 May 2012
    You need better trained teachers and academics so as to offer better education. So, the “leisure times” of these profession groups must be assessed with this perspective. Turkey’s sustainable growth rate, the potential growth rate in other words, varies between 4.5-5 percent. Many are not content with this rate as it is insufficient to catch up with high-income countries. Economic theory suggests that, ceteris paribus, higher the skills level of a country is, higher the potential growth rate of that country will be. Evidently, a better education system is the key to a more skilled labor force. I am not talking solely about primary, secondary and tertiary education. Pre-school education and life-long and in-house trainings are also important. [More]
    Completely out of control
    Fatih Özatay, PhD 26 May 2012
    “Just let it go and wait for the ECB to step in, monetize and pay their due debts." Spain’s prime minister Mariona Rajoy has called on the European Central Bank (ECB) to bring down the borrowing costs of certain European countries by purchasing their bonds. That is, he called the ECB for issuing currency to purchase their bonds. [More]
    Caution: Risk of material fatigue
    Fatih Özatay, PhD 24 May 2012
    I hope the extensive use of the policy tool (the material) does not cause a fatigue. So, how everything started? Before the global crisis, many countries already had achieved price stability and the rest were close to achieving it having ensured substantial drops in inflation. Then came the global financial crisis, albeit price stability. The world learned an obvious lesson: focusing solely on the price stability does not solve all problems. [More]
    We are 16th now but used to be 15th
    Fatih Özatay, PhD 22 May 2012
    But what is the meaning of Turkey being the sixteenth largest economy for the man on the street? The answer is quite simple: it has no meaning at all. Sometimes – I hope this happens from time to time, really – I become really uncomprehending and linger on a single issue. I somehow fail to acknowledge that thing and move on. The latest example of this was the “issue” about the international rank of the Turkish economy. [More]
    Unemployment figures give the same message as output figures
    Fatih Özatay, PhD 17 May 2012
    Neglecting small fluctuations, we can conclude that unemployment rate has been stable around 9 percent for the last four months. Unemployment figures announced on Tuesday are consistent with the “soft landing” scenario. Still, this does not necessarily mean that there will be soft landing as recent developments in Europe risk the reliability of this scenario. [More]
    Is it not as soft as expected?
    Fatih Özatay, PhD 15 May 2012
    The CBT will stick to the high-interest rate policy as long as the developments across Europe disturbs risk appetite. Now it’s almost the middle of the second quarter. The information at hand suggests that the Turkish economy has been growing at a significantly slower pace than in 2011, in line with the “soft-landing” scenario. [More]
    Open the curtains already
    Fatih Özatay, PhD 10 May 2012
    Wouldn’t it be better if those praising an institution could open the curtain of their eyes for a minute when assessing the circumstances? To begin with, we have to accept that it is reasonable if inflation diverges from target in a year or two. As long as the relevant central bank explains to the actors, to whom it declared the target and asked to set wage raises, interest rates and pricing strategies accordingly, the reasons of the divergence and convinces those actors that it had taken all steps possible to prevent such an outcome. [More]