Export story of the two crises
Fatih Özatay, PhD
19 April 2010
We continue to our journey: today we will examine the changes in export volume during the 2001 crisis and the global crisis. Commenting on the past developments is neither the only nor the most important purpose here. The main purpose is to have a hint about the prospective developments. Let us see whether we can make forecasts at the end of our adventure.
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Foreign fund story of the two crises
Fatih Özatay, PhD
18 April 2010
I will continue with the comparison of 2001 crisis and the global crisis. Previously I compared the two in terms of unemployment, inflation, and production. Unemployment rate increased during both. In the 2001 crisis unemployment rate rose by 3.5 point to 10.5 percent compared to the previous period. The rate jumped to 14 percent level in this crisis. Unemployment rate increased by the same amount, though to a higher level in the latter. The movements in the GDP were also similar in case of both crisis. The time period from the peak before the crisis to the trough after the crisis was the same in case of both crises. The period and style of recovery also seems similar. On the other hand, production loss between the peak and the trough was larger in the global crisis.
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What does the statement by the Central Bank imply?
Fatih Özatay, PhD
15 April 2010
Yesterday, Central Bank of Turkey (CB) made important statements. How will the changes to be implemented in the monetary policy in the context of this statement affect the corporate sector and consumers? It will not. There is nothing much that is our concern. However, I want to discuss the statement anyway. I will first want to apologize as this will be a technical comment to a large extent.
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We still deal with virtual issues
Güven Sak, PhD
13 April 2010
Today let us continue with the unemployment issue, which was explained to be virtual not structural, by Mr. Erdogan, the Honorable Prime Minister of Turkey. What do you remember about the part we have seen so far? First, we said "Turkey's most vital problem is unemployment"; and it still is. Second we argued "unemployment is a structural problem" and it still is. Now let us state the third point: unemployment is directly related with the education system of Turkey: unemployment rate rise among middle-aged people with weak education background. So, this problem is nothing but structural. This is what figures tell us. Then, is Mr. Erdogan wrong? Yes he is. He speaks politically. Sometimes what figures tell and what the politics require might not match up with each other as such. Therefore, w
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Making things harder for themselves
Fatih Özatay, PhD
12 April 2010
In some cases it becomes too hard to fight with inflation by changing interest rate policy. This applies particularly for the periods where inflation rate increases in parallel with the developments in the world. For instance, what can you do if the price of energy that you have to import increases?
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Society’s memory can sometimes be too strong
Fatih Özatay, PhD
11 April 2010
I noticed a story when I was reading the papers on Saturday: at the opening ceremony of a kinder garden in Mardin, a protocol member gives money as a prize to the children that played the local folk dance at the ceremony. And as he could not find any liras in his pocket, he gives 100 dollars per each. You might notice when you are shopping that sometimes people say the prices in million liras, not in liras. We also do the same thing, when you are talking of big amounts you easily get confused. You cannot decide whether to say trillions, quadrillions, or billions.
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Inflation story of the two crises
Fatih Özatay, PhD
08 April 2010
Let me say it at once: changes in gross domestic product (GDP) after the 2001 crisis and the 2008 crisis are completely in the opposite direction with the changes in inflation rate. The possible reasons for this situation might play a significant role in determining the future shape of the monetary policy. Let me express it more clearly. But first let me re-present the GDP graph I gave last Thursday.
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Negative differentiation in the economics is not a good thing
Güven Sak, PhD
06 April 2010
Now it is the best of times, and it is the worst of times again. For some, the economy goes like clockwork. The main feature of the economic recovery process we are in is its dual structure. On the one hand economic recovery prevails while a deep depression is felt on the other hand. There exists a so-called "good" and "bad" firm differentiation. And this negative differentiation is not a good thing. Credit interest rates are lower than ever. Banks has liquid funds to extend whereas; some firms are thirsty for liquidity. However, these two parties cannot meet. A while ago, I maintained it is possible that the fall in interest rates is not a good sign. In fact, it became more evident that it was a sign of the "dual differentiation", i.e. the negative differentiation in the economy. The pace
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Those with no internet literacy cannot find a job anymore
Güven Sak, PhD
01 April 2010
Turkey's most critical problem is unemployment. This was the case in 2002; and this still is the case in 2010. In fact, no fundamental change took place since 2002. The striking issue concerning the discussions on unemployment is the fact that the emphasis is put generally on the unemployment among young people. News featured on the media with the caption "One out of four young citizens of Turkey is unemployed" grabs attention. But this statement is correct and incorrect at the same time. This is exactly what the figures tell us. Unemployment is really prevalent among young people; however the biggest group across the total number of unemployed is constituted by middle-aged people. If you want to learn about the structure of unemployment, please keep reading.
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