25 February 2010
Which EU do we want to join? First, I want to remind you of two points: this commentary is solely on the economic realm. Second, I am not an EU expert. I started to take interest in the EU issue in 2003. So if you ask why I try to write on the EU issue, I would say that I have the courage of a person who does not know much about a particular subject.
Importance of the institutional structure
21 February 2010
The Sunday commentary of the last week ended with the following questions: Why are there such significant income gaps between different countries? How did some countries close rapidly the income gap between them and developed countries while some others put themselves into more bitter situations? How did Turkey manage to make no progress?
Is a way out for Greece without the IMF likely?
18 February 2010
Greece is in the Eurozone. Therefore, it has more obligations to fulfill compared to other EU member countries. Particularly there are public budget and public debt restrictions Greece has to comply. However it appears that Greece failed to do so not only during the crisis but also before the crisis. What is more, recent news suggests that the country has undertaken some liabilities which have the potential to increase public debt in the future. EU has institutions responsible for inspecting the liabilities imposed on Greece for being in the Eurozone. However, they have missed this incident out...
Greece should sign a deal with the IMF
15 February 2010
The world has been facing interesting developments. The state of affairs in Greece is of greater importance for Turkey. It will be useful to discuss under which circumstances the state of affairs in Greece leads to another financial crisis. We can name two specific conditions which are not independent from but can trigger each other. The first condition is as follows: the bonds Greece issued to finance budget deficit have lost value significantly due to the rising credit risk. Therefore, banks holding these bonds have faced losses manifested in the fall of the value of their assets. But how important is this?
The economy recovers, but...
11 February 2010
On Monday a critical data was announced. Industrial production increased by 7.5 percent compared to the same period in the last year when elements like seasonal factors and the differences between the labor force size are ignored. This is a significant surge. Another important development is that by the first months of the 2009, industrial production enjoyed a rise.
USA-Turkey: Medium term budget
04 February 2010
On Monday, US budget for 2010 fiscal year was declared. According to this, the budget which recorded a deficit of 10% of the GDP in 2009 will have a higher deficit in 2010 (10.6 %) whereas the budget deficit is targeted to be reduced as of 2011. Experts on the US economy are in a fierce discussion on the budget, which I will refer to in my commentaries time to time. Today, I specifically want to touch upon something which came to my mind as soon as I saw the public debt and interest payment estimates in the budget. And that 'something' would be comparing the figures for the US and for Turkey. Let us proceed with Table 1 and 2 without wasting time.
Why do many economists think inside the box?
31 January 2010
I would like to start with a 'very difficult' question: How do you indicate the TL value of oranges that worth 5 liras per a kilogram in short? You say 5 liras/kg, right? You say thousand liras/square meter for land; meters/second for speed, or Newton/square meters for pressure. MIT professor Blanchard's macroeconomics is one of the couple of books thought in sophomore macroeconomics courses in prominent universities. We also teach it at TOBB University of Economics and Technology. In the last edition of the book Blanchard made a change in 'the open economy' section: he changed the definition of exchange rate. In earlier editions, he used the European definition probably as he is French: an increase in the exchange rate indicated that the domestic currency lost value against foreign curr
How to ensure the credibility and sustainability of the fiscal rule?
28 January 2010
I would like to join others in writing on this issue; so that the readers of this column will understand that I also attended 'the meeting'. 'The' meeting was hosted by Vice Prime Minister Ali Babacan on Wednesday in Istanbul with the participation of some academics and economics columnists. You can say that as everyone has mentioned the meeting, it is not newsworthy anymore. But this is not the case exactly. The top agenda item of the meeting was 'fiscal rule'. This is an important issue; I believe you have witnessed several times when we addressed it at this column. But I would like to address the issue once more today but this time more from the angle financial reform.
Efficient financial markets
24 January 2010
Eugene Fama has recently cancelled his subscription of the Economist magazine. The Economist has recently published a several articles on financial market bubbles. Fama did not like this tendency and decided not to by the magazine again. But why? Of course, I have to give some information about Fama for those who does not know him. I also have to mention why the said news took place on the media. Otherwise, this subscription cancelling incident would not have any meaning.
A new retail confidence index
18 January 2010
We can say there is a consensus among economists that in 2010 Turkey's economy will grow at a rate close to long term average growth rate. This will to a large extent be achieved due to the marked recovery of exports compared to 2009, which was a quite unfavorable year in this regard. Positive developments in export performance heard in recent weeks confirm this dimension of the growth scenario. However, the scenario did not maintain an evident recovery in private consumption and private sector investment spending. If these two important components of national income enjoy a recovery before the foreseen period and at a stronger fashion as estimated in the basis scenario, 2010 growth rate can pass beyond the estimates. But is this a possibility given the current indicators?