Does the CBT cause noise pollution?
Fatih Özatay, PhD
25 October 2011
Evaluate the new multi-purpose-multi-tool monetary policy framework of the CBT: is it successful in shaping prospective expectations? I will get at the Central Bank of Turkey (CBT), but I first have to visit Sweden and then the US. One of the biggest contributions of Thomas Sargent, one of the winners of the 2011 Nobel Prize in Economics, to the literature of economics was about the expectations economic actors set about future value of important economic indicators when making prospective decisions. Expectation is a key subject in economics.
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Which language will the Central Bank speak?
Güven Sak, PhD
25 October 2011
I hope that the CBT stops playing in the sand and eliminates the second source of uncertainty today. Our opinion about the situation in Turkey has been changing. Lately I have been hearing the same question everywhere. People approach to me shyly and ask, “Excuse me. Are things as well as we are being told they are?” It is like they want to believe that things are all right. It seems like they will be very upset if they hear that things might go badly. But one way or another, they want to hear the truth only halfheartedly. I am sensing a growing trend of pessimism. Such are transition periods. The shift from optimism to pessimism, or vice versa, is not an overnight process. I believe that the rising pessimism is related closely to the exchange rate movements. Today I want to put in a frame
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A twist of fate
Fatih Özatay, PhD
22 October 2011
It must be a twist of fate that the mentioned method of finance “we” never want to face with again is cited as the savior of Europe. This year’s Nobel Prize in Economics was shared by Christopher Sims and Thomas Sargent. The Award Committee explained the justification for this decision with a forty-page report that discussed the contributions of Sims and Sargent. I think that it will be useful for graduate economics students and undergraduate students that take advance macroeconomics courses to access and read the report online. Page eight of this report addresses the significance of Sargent’s studies in terms of economic policy. One of the studies addressed was cited at this column several times: "Some Unpleasant Monetarist Arithmetic”, coauthored with Wallace. The study quoted several ti
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The young people are here; where are the workers?
Güven Sak, PhD
21 October 2011
Polls reveal that 86% of American workers agree with the protestors. “And, my friends, in this story you have a history of this entire movement. First, they ignore you. Then they ridicule you. And then they attack you and want to burn you. And then they build monuments to you. And that is what is going to happen to the Amalgamated Clothing Workers of America.” This controversial quotation is from 1918, and belonged to Mahatma Gandi, according to claims. Now forget about who said it. Let me assess this statement with respect to the residents of Zuccotti Park. First, everyone ignored them. Then they ridiculed them. We are rapidly approaching the “burning” phase now. However, they have not been able to kick the “Occupy Wall Street” protestors out of Zuccotti Park in New York.
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Some observations on the MTP-2
Fatih Özatay, PhD
20 October 2011
Unless economic units address and evaluate these details, the MTP might turn into a poem of desires that reads “productivity will increase, and Turkey will grow rapidly”. I will continue to “rumor” about the 2012-2014 Medium Term Program (MTP). My biggest concern about the MTP was that it estimated high levels of current account deficit for three years consecutively following the high current account deficit/GDP ratios in 2010 and 2011. With this perspective, five-year average of the current account deficit/GDP ratio reaches 7.7 percent by the end of 2014. This is the highest five-year average since 1990, the year when the capital movements were liberalized. According to the latest balance of payments figures, Turkey could not access net “resources” (borrowing) from abroad in August. Howev
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We cannot manufacture domestic automobiles with this judicial system.
Güven Sak, PhD
18 October 2011
A country cannot make high value-added production if conflicts about intellectual property rights cannot be solved easily in the judicial system. Lately, the world has become engulfed in the fire of upheaval. During the weekend demonstrations were held all around the world. This fire of upheaval is the clearest evidence that the new normal will not be at all similar to the old one. Today, however, I am not interested in the upheaval per se. I want to state from the very beginning with three observations about the demonstrations I have been following since the beginning of the year. First is that there are two types of countries in the world: those in which the police are harmed more than demonstrators during the demonstrations, and those in which the demonstrators are harmed more than the
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Some observations on the MTP
Fatih Özatay, PhD
18 October 2011
The five-year average to be witnessed by 2014 will be a historic record for the Turkish economy. Last Thursday 2012-2014 Medium Term Program (MTP) was announced. The point that attracted my attention the most was the current account deficit estimations. In 2010 and 2011, the ratio of the current account deficit to GDP was quite high: 6.5 percent and 9.4 percent, respectively (the ratio for 2011 was the estimation in the program). The MTP estimates that the high current account deficit/GDP ratio will persist in the following years: 8 percent in 2012, 7.5 percent in 2013, and 7 percent in 2014. This adds up to 7.7 percent average for the last five years by the end of 2014. What is more, the level estimated for 2014 is the highest since 1990, when the capital movements were liberalized. In sh
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Egypt needs its Özal
Güven Sak, PhD
15 October 2011
There is disillusionment with the pace of change in Egypt. Take the 1958 emergency law, which former president Hosni Mubarak limited to the regulation of narcotics and terrorism at the demand of Tahrir Square protesters. The military, in turn, recently expanded the reach of the emergency law to the suppression of strikes, rumors, traffic disruptions, etc. The reversal came after the Israeli Embassy attack, followed by the deaths of last Sunday, giving us a glimpse of the police state to come. “That’s the way it is in Egypt,” someone would say in the end, “there is a need for more restraint.” That mantra is all too familiar to anyone acquainted with recent Turkish history.
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I missed the red signal of my BB
Güven Sak, PhD
14 October 2011
My BlackBerry (BB) has not been working for the last couple of days. There has been a service failure for BBs throughout the world. I cannot read my e-mails and messages on time. I miss the red signal of the BB and its buzzing when a message comes. I am upset. I feel that something is missing. In the early 1960s, when I was a child, you could not make a long-distance phone call but had to be “connected” to the line. You first had to call the telephone exchange and ask the operator to “write down” the phone number you wanted to call. Then, the operator had to “connect” the number to your telephone line. I am telling this so that you can understand from which point I started. Back then I could not have imagined that one day I would miss the red signal of my BB.
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Two points about balance of payments
Fatih Özatay, PhD
13 October 2011
The development in August might turn into a trend as long as Merkel and Sarkozy manage to “skillfully” continue to swing the lead.
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