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    New decisions from Europe
    Fatih Özatay, PhD 29 October 2011
    Even less critical accounts stress that the plan can only save time for the European leaders. The decisions Eurozone leaders announced on October 27 towards morning initially received a positive reaction from the markets. This tendency is continuing while I am writing these lines, on Friday morning. On the other hand, the views of some experts renowned across markets as well as of academicians who recently have been making important assessments on the crisis in the European Union were not in line with that of markets. The decisions announced can be summarized as follows: [More]
    Having multiple purposes
    Fatih Özatay, PhD 27 October 2011
    A month ago, the CBT was talking about the possibility of an expansionary monetary policy. However, a step on the opposite direction was taken. Tuesday morning I spoke at a news program at CNBC-e. I talked with Servet Yıldırım on the new action plan the Central Bank of Turkey (CBT) was to announce on Wednesday. It was difficult to be concrete due to contradictory statements delivered after the last four Monetary Policy Council meetings. There existed a radical difference between the results of the first three Council meetings and those of the last one. Therefore, I commented, “I, as a former central banker, do not understand what the CBT is trying to do.” [More]
    Does the CBT cause noise pollution?
    Fatih Özatay, PhD 25 October 2011
    Evaluate the new multi-purpose-multi-tool monetary policy framework of the CBT: is it successful in shaping prospective expectations? I will get at the Central Bank of Turkey (CBT), but I first have to visit Sweden and then the US. One of the biggest contributions of Thomas Sargent, one of the winners of the 2011 Nobel Prize in Economics, to the literature of economics was about the expectations economic actors set about future value of important economic indicators when making prospective decisions. Expectation is a key subject in economics. [More]
    A twist of fate
    Fatih Özatay, PhD 22 October 2011
    It must be a twist of fate that the mentioned method of finance “we” never want to face with again is cited as the savior of Europe. This year’s Nobel Prize in Economics was shared by Christopher Sims and Thomas Sargent. The Award Committee explained the justification for this decision with a forty-page report that discussed the contributions of Sims and Sargent. I think that it will be useful for graduate economics students and undergraduate students that take advance macroeconomics courses to access and read the report online. Page eight of this report addresses the significance of Sargent’s studies in terms of economic policy. One of the studies addressed was cited at this column several times: "Some Unpleasant Monetarist Arithmetic”, coauthored with Wallace. The study quoted several ti [More]
    Some observations on the MTP-2
    Fatih Özatay, PhD 20 October 2011
    Unless economic units address and evaluate these details, the MTP might turn into a poem of desires that reads “productivity will increase, and Turkey will grow rapidly”. I will continue to “rumor” about the 2012-2014 Medium Term Program (MTP). My biggest concern about the MTP was that it estimated high levels of current account deficit for three years consecutively following the high current account deficit/GDP ratios in 2010 and 2011. With this perspective, five-year average of the current account deficit/GDP ratio reaches 7.7 percent by the end of 2014. This is the highest five-year average since 1990, the year when the capital movements were liberalized. According to the latest balance of payments figures, Turkey could not access net “resources” (borrowing) from abroad in August. Howev [More]
    Some observations on the MTP
    Fatih Özatay, PhD 18 October 2011
    The five-year average to be witnessed by 2014 will be a historic record for the Turkish economy. Last Thursday 2012-2014 Medium Term Program (MTP) was announced. The point that attracted my attention the most was the current account deficit estimations. In 2010 and 2011, the ratio of the current account deficit to GDP was quite high: 6.5 percent and 9.4 percent, respectively (the ratio for 2011 was the estimation in the program). The MTP estimates that the high current account deficit/GDP ratio will persist in the following years: 8 percent in 2012, 7.5 percent in 2013, and 7 percent in 2014. This adds up to 7.7 percent average for the last five years by the end of 2014. What is more, the level estimated for 2014 is the highest since 1990, when the capital movements were liberalized. In sh [More]
    Two points about balance of payments
    Fatih Özatay, PhD 13 October 2011
    The development in August might turn into a trend as long as Merkel and Sarkozy manage to “skillfully” continue to swing the lead. [More]
    Speed is not always bad
    Fatih Özatay, PhD 11 October 2011
    The most unpleasant challenge to this type of economic policies is the sudden reversal of the economic circumstances.   [More]
    Which one?
    Fatih Özatay, PhD 08 October 2011
    The objective of the CBT to limit the credit expansion was relevant. But why did the BRSA not take the decision needed so as for the CBT decision to work? [More]
    Exchange rate movements: why different now?
    Fatih Özatay, PhD 06 October 2011
    Global risk perception is high and capital is heading towards safe havens. [More]