Growth analysis with two dual character
Fatih Özatay, PhD
01 April 2010
Yesterday rate of economic contraction for 2009 was announced: 4.7 percent. Contraction is lower than expected. Upon newly announced figures, formerly declared gross domestic product (GDP) data for 2008 and 2009 were also revised. Rates of contraction for the first three quarters of 2009 were reduced. On the other hand, it was realized that growth rate in 2008 was lower. 2008 growth rate, known to be 0.9 percent, was realized to be 0.7 percent.
[More]
Activity in bank stocks may be a good sign
Güven Sak, PhD
30 March 2010
Last Thursday Istanbul Stock Exchange (İMKB) was in a strong rise. The stocks of almost four banks were traded; and the İMKB had a historic day in this sense. Sabah daily published a story on this issue on Friday with the heading 'Istanbul Banks Exchange'. The interesting side of this movement is that it was unique for Turkey. Developing countries' stock markets were mild. Developed countries' stock markets were mild as well. And on the agenda of Turkey was a constitutional amendment package which would crystallize the social polarization and which in fact seemed to be designed for this purpose. It appeared that there is no apparent reason to justify the rise in stocks market. The comments delivered in news channels therefore seemed as commentators were also surprised. To be honest, I thin
[More]
Greece will take a deep breath, but will not be in comfort
Fatih Özatay, PhD
29 March 2010
The preceding week was quite critical for Greece. The decision European Union will make in the Euro-zone country leaders meeting last week was of vital importance for the country. But, will the resultant rescue plan implied in the delivered statements enable Greece to take deep breath? The short answer is, though it will, the process will not be easy and comfortable. There are some problems related with design. I will try to clarify the issue.
[More]
Incentives and institutions
Fatih Özatay, PhD
28 March 2010
Incentives have a critical importance in economic theory: they determine individuals' behaviors. For instance level of development of an economy is related with the type of incentive mechanisms designed. As a result economists put a special emphasis on the designing of incentive mechanisms. Before advancing on 'divine' issues like development level, let me return to an interesting book I mentioned before. First chapter of Levitt and Dubner's Freaknomics starts with the following example:
[More]
Please fasten your seat belts
Güven Sak, PhD
25 March 2010
Everyone has their own problems. If you hear the parties in struggle, they have fantastic claims and they think they are right. They are telling with passion the unfair treatment they are facing. However, there appears an atmosphere where small losses in the way to victory do not count and where anything is serving to the end is lawful. The trick here is not to push the country to this mood. If the authorities responsible for the adjustment among institutions become a party, such occasions become inevitable. We have sensed this atmosphere before 1980, and it was not nice. But there is nothing we can do. If we cannot change the atmosphere fundamentally, we should deal with the steps that can be taken in the coming period to secure economic stability. Rule based fiscal policy has become more
[More]
Countries other than Turkey take measures against unemployment
Fatih Özatay, PhD
25 March 2010
After the deep crisis in 1997, unemployment rate in South Korea jumped from 2.5 percent in 1996 to 7 percent in 1998. With the policies implemented that point onwards, Korea reduced the unemployment rate to 3.3 percent in 2002. How did Korea achieve this?
[More]
Obama continues with the stimulus packages
Güven Sak, PhD
23 March 2010
Did our focus shift from the crisis toward the budget recovery? Did the crisis management measures have lost place on the agenda and the time to eliminate the damage of the crisis on the budget came? No, it did not; not yet. The administration of the United States of America (USA) continues to manage the crisis period. US Senate passed the Jobs Bill on March 17, 2010. The bill now waits to be signed by President Obama. Therefore, the administration accepted a new $18 billion economic stimulus package to manage the crisis process. US administration learns new lessons from the crisis and keeps on trying. They do crisis management there; they still do. But, we wait. Since we do nothing but wait, we do not feel that somebody is in charge. Have you thought why we are looking around with anxiety
[More]
Our 'deep' problem and 2015
Fatih Özatay, PhD
22 March 2010
Good news was heard from the Standard and Poors who increased Turkey's credit grade. Turkey's performance is quite pleasing given that some EU member countries also in the Eurozone are faced with serious problems. The main reason for the increase of Turkey's credit grade is the fact that the financial sector does not encounter much problem. Particularly considering the 1980s, the progress Turkey made with respect to stability should not be underestimated. I believe it is quite obvious that if we had been caught by the global crisis with a weak banking sector, high public debt and high budget deficit, we would have gone through highly rough times.
[More]
Shifts to formal economy cannot be secured solely by the Ministry of Finance
Güven Sak, PhD
16 March 2010
This is the one inevitable discussion for Turkey. There exists a common belief that Turkey has high rate of informality. This belief is common though there are no comprehensive studies on this issue. If Turkey wants to get on a sustainable and steady medium term growth path, it should deal with the informality problem in a comprehensive manner. So, why is that the case and how can informal economy be eliminated? Let us talk about these today. I personally believe that the shift from informal to formal economy cannot be secured and coordinated solely by the Ministry of Finance.
[More]
When will Turkey have a technology firm quoted in NASDAQ?
Güven Sak, PhD
13 March 2010
This is the exact question of today. This is where the key to turn the 2008 global crisis into an opportunity lies. There are more than a hundred Israeli firms quoted in NASDAQ. The sum of the firms from Europe, India, and China is also around a hundred. India is one of the countries that have recently sprinted while Turkey lags far behind in the competition. So, the question is: "How can Turkey have technology firms quoted in NASDAQ of the United States of America?" The answer is quite simple: When Turkish entrepreneurs get to enjoy an entrepreneurial government. Studies on this subject associate the progress made by Israel and India with the entrepreneurial government issue. But why is today the right time? Where does the opportunity lie? We will see. Let us first address the NASDAQ issu
[More]
