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    How many hours does it take to ride from Ramallah to Beytullahim?
    Güven Sak, PhD 16 October 2010
    There is no outright answer to this question. This is what our friend Musa told us last week. If you check it on the map, the distance between Ramallah and Beytullahim is around 20 kilometers. However there is no direct answer to the question as to how many hours it takes from Ramallah to Beytullahim. Because both are Palestinian cities under Israel invasion. So, nothing is easy there. Anything can happen at any moment. Have you ever imagined how it could be to live in those territories? This exact commentary is written to help you imagine how it would be to do business in Palestine. It is quite hard to do business in Palestine. It is hard, but not impossible to ensure industrial development in Palestine. But like what I said the day before about Diyarbakir, it is costly to do business in [More]
    Possibility of pursuing a new election economy
    Fatih Özatay, PhD 14 October 2010
    Developed countries introduced almost 'crazy' measures against the global crisis. They created liquidity abundance and kept interest rates at quite low levels. As a result of this 'emerging market economies' across developing countries started to witness substantial short term fund inflows. [More]
    What does Gaziantep have that Diyarbakir does not ?
    Güven Sak, PhD 14 October 2010
    Have you visited seen Gaziantep or Diyarbakir? If you have, you can notice that the former is rich and the latter is poor. When I first visited Gaziantep, I felt myself in Bursa where I grew up. In fact, Gaziantep is now sort of like Bursa, the developed western province. It is the industrial center of the Southeastern Anatolia. It now is. Gaziantep is one of the primary examples to how industry was expanded towards Anatolia following the liberalization reforms of 1980. However, a similar development could not be observed in Diyarbakir, which is at 3-hour distance to Gaziantep. Then, why did the industry, which could reach to Gaziantep bypassed Diyarbakir? What difference does the three-hour distance make? Nowadays in Turkey the main agenda item is the Kurdish issue. And when thinking on t [More]
    Measures to prevent temporary FX inflows
    Fatih Özatay, PhD 11 October 2010
    The excess liquidity and low interest rates in developing countries is a source of trouble for developing countries including Turkey. And it appears that we will discuss more often the trouble developed countries brought on us. This phenomenon gives way to a rise in short term fund inflows to developing countries. [More]
    Mind the difference between temporary-permanent FX inflows
    Fatih Özatay, PhD 10 October 2010
    In developed countries interest rates vary at quite low levels. Table 1 shows the returns on two-year treasury bills in selected developed countries, Turkey and Brazil. As seen, the difference is quite large. Interest on ten-year bills of developed countries stand at 2.3-2.9% interval while that in Japan stands at 0.9%. [More]
    It is bad to act like turkeys voting for Christmas
    Güven Sak, PhD 07 October 2010
    Turkey acknowledged this with the banking crisis of 2001. Before the crisis everyone through that everything was normal. There existed a false common opinion that the unsustainable could in fact be sustained. We believed that the process we were going through was normal. But it was not. That was when I learned you should ask 'Ok, how did this happen?' particularly in such periods. And nowadays I believe that nowadays we should remember how Turkey was driven towards the 2001 banking crisis. The main lesson to be learned from that period is given in the title: It is catastrophic to act like turkeys voting for Christmas. It is useful to occasionally inject uncertainty into the system. It is useful to be cautious in this unsteady period the world witnesses. So, with this lens, it is a good thi [More]
    Consumer price inflation and headline inflation: why in the sulks?
    Fatih Özatay, PhD 07 October 2010
    Until some time ago, the day when the inflation figures were announced had a special importance for me. I waited the announcement with excitement and tried to evaluate the figures. I believe this was a 'occupational deformation' resulting from my duty at the Central Bank in the period of intense inflation after the 2001 crisis. [More]
    It is a good thing that which action the Bank will take with respect to the exchange rate is not certain
    Güven Sak, PhD 05 October 2010
    Central Bank of the Republic of Turkey (CBRT) was to reinitiate regular FX (foreign exchange) purchase tenders. However the announced statement was different than those in the previous FX purchase tender announcements. According to this, the bank could purchase extra FX when deemed necessary. In regular FX purchase tenders, it was known in advance the quantity the bank will purchase and when the purchase will be made. But this time the bank stated that it can carry out 'irregular' purchases. Evidently, the bank says in a way that it can intervene. In fact, the bank could have intervened anytime desired even before. But this time it reminded everyone of this possibility with a strong emphasis. We can say that the bank has broken the routine slightly. This way, everyone started to wonder wha [More]
    The rabbit Central Bank pulled out of the hat
    Fatih Özatay, PhD 04 October 2010
    Yesterday I tried to explain the decision of the Central Bank of the Republic of Turkey (CBRT) on a new FX purchasing system. Now it is time to talk on what this decision implies for the exchange rate. To begin with, I have to underline that the new system allows surprise interventions in the FX market, if desired. [More]
    A slight divergence from pure floating exchange rate regime
    Fatih Özatay, PhD 03 October 2010
    On Friday the Central Bank announced an important decision on FX purchase tenders. In the former system, daily purchase limit was US$80 million. The announcement said: "In case of strong capital inflows, the Central Bank can raise the quantity in regular FX purchase tenders in order to accelerate FX purchases." And continued: "...when such a decision is made, the extra quantity to be purchased within the following week will be announced on the first workday of the relevant week." [More]