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    Informal economy and unemployment
    Fatih Özatay, PhD 03 August 2009
    Yesterday I mentioned how fighting with informal economy becomes more unavoidable for Turkey day by day. And obviously, the way to start the fight is launching a tax reform. Implementing such a reform might have significant political costs. There are also other risks that reduce the possibility for politicians to initiate tax reforms. [More]
    Starting with the informal economy?
    Fatih Özatay, PhD 02 August 2009
    Economic policies to increase domestic savings rate are discussed increasingly in the recent period. Korkmaz İlkorur, who frequently emphasizes that Turkey has to go through a radical economic transformation to achieve a higher sustainable growth rate and underlines that there are several reform areas to serve this purpose in particular at micro level, addressed this issue in his column in Radikal daily on Thursday. [More]
    Waste of time
    Fatih Özatay, PhD 30 July 2009
    In the last two articles I started to seek rough answers for the question how sustainable growth rate can be raised after the end of sharp contractionary period we are in. as you might note, the question is not on how we can overcome the contraction we are currently faced with. It is on sustainable growth rate of Turkey, thus is does not focus on the short term. Of course, the solution considered for the medium term might have a positive impact on the short term growth rate. For instance, you launch a highly credible reform program that everyone develops a brighter outlook on future of the economy in advance. Consumer and investor confidence improves and demand starts to go up. Moreover, Turkey can receive a bigger share from foreign capital the amount of which will be lower in the upcomin [More]
    Fund flows between states
    Fatih Özatay, PhD 27 July 2009
    The question we asked yesterday was: If in the 'new financial system' amount of foreign funds will be lower; how can we achieve high growth? Here, financial sector refers to global financial system. One way to achieve this is increasing domestic savings rate. Second is, as Turkey, contributing in the design of the way the new financial system transfers funds to countries like Turkey. Third can be focusing on reforms that directly improve the competitiveness of Turkey and level of per capita income. [More]
    On savings rate
    Fatih Özatay, PhD 26 July 2009
    Low domestic savings rate and the problems it causes are being discussed more frequently in the recent period. I also wrote a couple of commentaries on this issue. There are several reasons why low savings rate is being frequently discussed. [More]
    It is not in our culture, what can we do?
    Fatih Özatay, PhD 23 July 2009
    We lack an important skill. We do not know how to tackle recession under normal conditions. We do not have that feature in our culture. Until now, all recessions were encountered in the face of a problematic economic structure. And therefore, the economic policies we tried to implement to tackle the recession were naturally designed in accordance with the problematic initial conditions. However, the contractionary period we entered in the last quarter of 2008 has a fundamental difference: Initial economic conditions were not 'fatal'. This positive aspect, unfortunately be a misfortune for us and we did not know what to do. And we ignored for a long time those who knew what to do and made recommendations one after another. [More]
    I hope I am wrong
    Fatih Özatay, PhD 20 July 2009
    Krize karşı ekonomi politikası tasarımında ve uygulamasında çok önemli hatalar yaptık. Şimdi bu hatalar, büyüme hızımızı artırıcı politikalar uygulamamızın önüne önemli engeller çıkarıyor. "Bütçe açığı çok arttı, bundan sonra iç talebi artırıcı politikalar uygulayamayız" deniliyor. Ama bunu diyenler o bütçe açığının artmasının tohumlarını 2007 ve 2008'de, üstelik ekonomi dışı nedenlerle ekenlermiş, ne gam. [More]
    Do we deserve these?
    Fatih Özatay, PhD 19 July 2009
    First of all I have to apologize. I do not remember exactly how many columns I have written on the senselessness of automotive sector tax cuts. I argued that it will not have effect on domestic production and will increase imports. I maintained that through domestic production increases at a certain level, this will happen temporarily as people will backdate automobile consumption to benefit from price advantage. I said that rather than using budget resources in this area, budget resources would rather be transferred to poor sectors that will by domestically produced goods, for instance to unemployed. This way, I said, social justice would also be protected. [More]
    Possibility of spinning rises
    Fatih Özatay, PhD 16 July 2009
    Unemployment data for April were announced yesterday. In the recent months it became a tradition to say 'as expected' each time new data is announced. There is still no difference; unemployment rate rose 'as expected'. It went up from 9.9 percent in April 2008 to 14.9 percent in April 2009. In other words, unemployment rate increased by 5 points. Non-agricultural unemployment rate is, no surprisingly higher: It increased by 5.9 points than the same period last year and reached 18.2 percent. What is more and again as expected is the high unemployment rate among 15-24 age group (26.5 percent) and the rise in the rate over the last year (8.9 points). [More]
    Seventeenth biggest
    Fatih Özatay, PhD 13 July 2009
    Automotive sector market data for June was announced. Now it is time for intellectual monitoring. Tax cat was implemented for the automotive sector effective as of the mid March. It is obvious that the mentioned sector is important for Turkey in particular when considered together with its sub-industry. A slack in the sector affects the economy as a whole. Despite the importance of the sector, however, I argued immediately after the implementation of the tax cut that the decision is wrong. Because, we exported a large proportion of the automobiles we produced. The decision however had no effect on export prices. On the other hand, a significant proportion of the automobiles sold within the country were imported. The decision led to a reduction in the prices of imported cars as well. In tha [More]