Third ‘traditional’ weekend commentary
Fatih Özatay, PhD
17 January 2010
Since we said 'traditional', let it be the third than the first one, so that it goes with the meaning of 'traditional'. With the global crisis, criticisms of chief economists about economic theory have peaked. I am addressing this issue for a while now; I used not to write 'Sunday's commentaries in the past', but it seems that I will develop such a habit at least for a certain while. And this is also a 'Sunday's commentary'.
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Back or forth in time?
Fatih Özatay, PhD
14 January 2010
After the rapid rise in October, industrial production increased at a limited rate in November. On the other hand, capacity utilization rate increased considerably in December. These data do not give any new information as to what extent the growth estimations for 2010, which generally vary between 4 percent and 5 percent and sometimes go beyond 5 percent, are realistic. This interval of growth estimate seems as realistic as it was a couple of months ago.
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Growth threshold to reduce unemployment
Fatih Özatay, PhD
11 January 2010
Recently, a number of estimations on 2010 growth were made. The common feature of these estimations is that they are all above the official estimate given in the Medium Term Program (MTP). MTP foresees 3.5 percent growth in 2010. Estimates by economists and institutions generally vary between 3.8 and 4 percent. Some even slightly exceed 5 percent.
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Faith in market
Fatih Özatay, PhD
10 January 2010
In the last days of 2009, I mentioned that the economic theory is going through hard times. This is particularly the case for macroeconomic theory which tries to explain how variables like national income, unemployment rate, interest rate, exchange rate or price level are determined at a certain point in time and how do these move in time and whether or not these movements can be altered via economic policy interventions of the state.
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So, is this how it ends?
Fatih Özatay, PhD
07 January 2010
What was the magic phrase of the program implemented after the 2001-crisis? It was 'fiscal discipline'. In the aftermaths of the crisis, we first had to put off the fire and cool the climate and then implement the measures to prevent the reemergence of the fire. Putting off and cooling the fire referred to disciplining the fiscal policy to prove that budget deficit and public debt will tend to fall and to saving the banking sector which was on the free fall. Then, it was necessary to ensure the sustainability of fiscal discipline, put the banking sector on its feet and implement the radical institutional regulations that will prevent the occurrence of such unfortunate crisis.
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Measures against low exchange rate
Fatih Özatay, PhD
04 January 2010
The last two commentaries of 2009 were an introduction to what measures can be taken against the appreciation of Turkish lira. The first commentary asked what we would do if Turkey manages to create a new success story and thus the Turkish Lira tends to appreciate. I firstly recalled post- 2001 period and mentioned the positive impacts of the appreciation (low exchange rate) enjoyed back then. Then, I underlined that low exchange rate that will come up if a new story is created will least possibly ensure positive effects as was enjoyed in the post-2001 period. The second commentary finished like this: "In that case, if we get a new 'economic story' that will lead to low exchange rate in the coming period, exports will be affected quite adversely unlike the case in the post-2001 crisis per
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The New Year
Fatih Özatay, PhD
03 January 2010
First commentary of the new year... You have to create a new folder under the 'documents' folder and name it. It is easy when you say: 'Radikal2010'. I have a separate folder for each year; their number is on the rise. In the past, it was just 'a new folder' created at the beginning of each year. But being aware of the rise in their number is a totally different question mark. "I have just created the folder for 2009!"
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New economic story and low exchange rate
Fatih Özatay, PhD
31 December 2009
I will continue from where I stopped on Monday. The question was: if Turkey gets an 'economic story' and as a result if the lira tends to appreciate, can we increase exports? The question appears as conflicting in this wording. But in fact it is not. To show why, I would like to summarize my comments on Monday.
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Control on capital movements
Fatih Özatay, PhD
28 December 2009
The question is what will we do if Turkey manages to create a new success story and thus the Turkish Lira tends to appreciate? In fact, let alone the creation of a new story, one even doubts the sustainability of the existing sloppy and short economic story that no one is willing to read. However, I am supposed to make comments on economics in this column; I am interested in the question above and I have been discussing his with colleagues for a while. Let me open the issue up. To do this, I have to go back to the program implemented after the 2001 crisis, conditions in the rest of the world back then as well as the outcomes of the implemented program.
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Again on the earthquake of the economic theory
Fatih Özatay, PhD
27 December 2009
Mainstream economic theory is under crossfire. It is not possible to analyze the crisis using the existing models: those models do not include the financial system, neglect the possibility of not repaying the debt and they do not even contain monetary system. Furthermore, these models assume that people have an extraordinary set of information and the capacity to process that information. What is more, they know how the economy operates. In short, the 'people' assumed in the model have excellent mental abilities; they can comprehend anything.
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