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    What is Turkey’s growth strategy?
    Güven Sak, PhD 02 February 2010
    We started to talk about the dynamics of Turkey's economy. First of all in the last week, we addressed low savings rates. The step to be taken in this regard was to introduce a strong fiscal rule and a monitoring mechanism that will ensure its credibility. This week let us talk upon another issue regarding Turkey's economy. Do you think the fact that Turkey is a big economy affects negatively the possibility of building the growth process upon innovations and discoveries? The answer is, yes it does. Or to put it more cautiously, it might. Let us take a look at the existing problem. [More]
    Turkey’s main problem is that it does not have a medium-term growth story
    01 February 2010
    We are about to leave behind the first decade of the second millennia A.D. We have more data to review the last decade with respect to economic performance. How do you think that the 2000's will be remembered in the future? Could Turkey write a success story in terms of economic performance over the last decade? This commentary involves a short review in the framework of these questions. After a short assessment of 1980's, 1990's and 2000's and stating five main point, I will try to voice some wishes on how 2010's will be. [More]
    Why do many economists think inside the box?
    Fatih Özatay, PhD 31 January 2010
    I would like to start with a 'very difficult' question: How do you indicate the TL value of oranges that worth 5 liras per a kilogram in short? You say 5 liras/kg, right?  You say thousand liras/square meter for land; meters/second for speed, or Newton/square meters for pressure. MIT professor Blanchard's macroeconomics is one of the couple of books thought in sophomore macroeconomics courses in prominent universities. We also teach it at TOBB University of Economics and Technology. In the last edition of the book Blanchard made a change in 'the open economy' section: he changed the definition of exchange rate. In earlier editions, he used the European definition probably as he is French: an increase in the exchange rate indicated that the domestic currency lost value against foreign curr [More]
    Does growth have to be polluted?
    Güven Sak, PhD 30 January 2010
    Turkey has been changing impressively since 2002. It achieves high growth rates on the one hand and a rapidly changing economic structure on the other. Turkey has become a world economy with an ever increasing rate of transformation. This is exactly why Turkey was one of the countries that were highly affected by the global crisis of 2008. I guess one does not need to know how rockets fly in order to claim this. If you are an integral part of the global economy, you will inevitably be affected by the global crisis at the highest degree. Turkey has been going through a rapid change since 2002 in terms of both quantitative and qualitative indicators. It is basically possible to add these up one after another to have a perfect picture of transformation. However, it is not quite so in practice [More]
    How to ensure the credibility and sustainability of the fiscal rule?
    Fatih Özatay, PhD 28 January 2010
    I would like to join others in writing on this issue; so that the readers of this column will understand that I also attended 'the meeting'.  'The' meeting was hosted by Vice Prime Minister Ali Babacan on Wednesday in Istanbul with the participation of some academics and economics columnists. You can say that as everyone has mentioned the meeting, it is not newsworthy anymore. But this is not the case exactly. The top agenda item of the meeting was 'fiscal rule'.  This is an important issue; I believe you have witnessed several times when we addressed it at this column. But I would like to address the issue once more today but this time more from the angle financial reform. [More]
    Cannot we make a reform without the sledgehammer?
    Güven Sak, PhD 28 January 2010
    Turkey is in need of a wide platform of political consensus not only to change the Constitution but also to found the public budget on solid grounds. Democratic political history of Turkey is like a parade of fiscal indiscipline. There is no single day that one does not offer a dime more than another did. We always suffer from this, but always do this anyway. Our current situation in need of a dime from the IMF is solely the fruit of fiscal indiscipline. So, have you taken a look at the public finance reforms? For instance, since the beginning of democratic regime Turkey failed to implement a comprehensive tax reform. Income Tax Law was enacted in 1947 and amended upon the 1960 coup and 1971 memorandum. 1980 coup d'état initiated a number of reformation efforts including VAT reform. So, to [More]
    What is the reasonable and rational story for the year 2010?
    Güven Sak, PhD 26 January 2010
    Have you ever considered? If your job was to tell foreign investors the virtues of investing in Turkey what would you tell them in 2010? If they were not already investing throughout the world, it would not be a big problem. You would say "Sir, Turkey was the country to recover most rapidly from the crisis" If he seemed surprised, you would add "We also have a freakish Medium Term Program, which is highly credible. We know in advance which steps the government will take." And if you have had a few, you would continue "You know, the global economic crisis did not hit Turkey. We were the almost not harmed." You could also go too far to say "We in fact do not need to settle with the IMF. However, they are so ready to settle with us that we might do so. But you cannot do these now. They know e [More]
    Efficient financial markets
    Fatih Özatay, PhD 24 January 2010
    Eugene Fama has recently cancelled his subscription of the Economist magazine. The Economist has recently published a several articles on financial market bubbles. Fama did not like this tendency and decided not to by the magazine again. But why? Of course, I have to give some information about Fama for those who does not know him. I also have to mention why the said news took place on the media. Otherwise, this subscription cancelling incident would not have any meaning. [More]
    Turkey’s attempt might be nonsense; but how about US’s?
    Güven Sak, PhD 21 January 2010
    Last week we mentioned the "poll tax" argued to be implemented for banks. This week we want to continue with this subject. It is quite fruitful, let us clear the question marks in our minds. We believe we sufficiently emphasized that imposing an annual tax per branch from banks is not very smart in terms of design. Moreover, we also underlined that the discourse of the regulation seemed a bit pre- Magna Charta. You cannot just say "I have to finance that project" and invent new taxes whenever you get into trouble. The realm of tax policy is not suitable for coming up with new inventions overnight. If you let at the first time, they will do it again and again. As inventing new taxes once faced with a trouble will reduce foreseeability down to zero, it is quite bad considering the stability [More]
    Why did Eugene Fama cancelled his subscription to The Economist?
    Güven Sak, PhD 19 January 2010
    When defining the twenty first century, we will not be able to neglect the first global financial crisis of the world. Perspective of the world and life styles in the eyes of economists and us has been changing comprehensively along with the crisis. In fact, it has to be so. We are going through an unusual period. What will shape tomorrow will be today's discussions. Today's discussions, however, are quite ridiculous. Have you been following what the unyielding defends of the market economy talk about nowadays? Last week in US Congress, the first official global financial crisis investigation was launched. At the first phase, senior officials of four financial institutions were interrogated with. The interrogations proceed as a farce. Let us take a look at the recent developments. [More]