Where will the exchange rate head?
Güven Sak, PhD
23 September 2011
The economy has accumulated risks during the process of uncontrolled growth. The exchange rate adjustment is seen as a remedy to this problem. It appears that the festive holiday break of the exchange rate adjustment has ended. We have been watching the exchange rate movements since the beginning of the week. Okay, the external circumstances are chaotic and the increase in the dollar exchange rate stems to a large extent from the euro/dollar parity. However, the impact of such chaos did not use to be like this. The Turkish Lira did not depreciate as such, but even appreciated slightly. Exchange rates tended to remain constant over a long time. No one used to talk so frequently about dollarization. For the first time since 2001, entrepreneurs had started to borrow in dollar terms with the a
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On Israeli-PKK relations – II
Nihat Ali Özcan, PhD
22 September 2011
After the Cold War, Turkish-Israeli relations took a new shape. Saddam Hussein’s invasion of Kuwait was a source of trouble for both parties. Saddam, who was then in search of support and legitimacy against the coalition forces, targeted Israel with Scud missiles. Vigorous efforts of Turgut Özal to join the forces to be deployed in an operation to Iraq and close relations with the U.S. brought Turkey and Israel closer.
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How should the new monetary policy be?
Fatih Özatay, PhD
22 September 2011
Risk-lover financial sector and asset price bubble had revealed that the “conventional” monetary policy will no longer be sufficient. Thanks to the Central Bank of Turkey (CBT), we have started to discuss to what degree the “conventional” monetary policy could solve the problems that emerged with the global crisis. I think this discussion was quite useful. What I mean by “conventional” monetary policy is the one that chiefly aims to secure price stability. The countries which implement inflation targeting regime specifically employ this type of monetary policy. The European Central Bank sticks to this type of policy although it does not have an inflation targeting regime and the Federal Reserve uses this policy to a large extent.
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Is it that hard to go beyond the orthodoxy?
Fatih Özatay, PhD
20 September 2011
The first credit facility Greece used had an interest three points higher than that on German bonds. Economic circles of the developed world have started to meet theories brought on mainly by developed country economists, thought to apply more for emerging market economies and thus not interested much in and considered to be outside the fundamental branches of economics. However, some economists, I have to say mainly those in Germany though I do not like generalizations, still are unwilling to become acquainted with these theories. The Bank for International Settlements (BIS), known as the central bank of central banks, organizes several meetings targeted at central bankers. I regularly attended some of those meetings when I was working at the Central Bank of Turkey. The meetings devoted t
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I am at the Erzurum-REDEVCO Shopping Mall
Güven Sak, PhD
20 September 2011
Women in Erzurum participate in business life more. Erzurum is changing as Turkey is changing. Yesterday this tweet was on Twitter: "I am at Erzurum REDEVCO Shopping Mall." I see thismessage every day, actually. What is the point here: There is a shopping mall in Erzurum. There wasn't one a couple of years ago. Moreover, there are people wandering around in that mall with iPhone or BlackBerry smartphones. Neither was this possible a couple of years ago. The world is changing. Turkey is changing, as well. So, does Erzurum, naturally. As of yesterday, I started to see this tweet in English. I was happy to see this. Another tweet from Sunday was from Antep. It said, "The view in Gaziantep towards morning from Sankopark's terrace," accompanied by a picture of Gaziantep. We did not have these i
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How can fiberoptic cables reduce migration from the east to the west?
19 September 2011
I do not know about politics, but technology definitely has the power to make dreams come true. Let’s say that you are in Istanbul and you want to order kebab from the restaurant two blocks away. You pick up the phone and a young employee in Diyarbakır receives your order. The same person receives an order for sushi for a restaurant in Ankara and diverts the order to that restaurant. Maybe that employee also records the appointments made for a hospital in Arbil.
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TRT-Arabic in action
Güven Sak, PhD
17 September 2011
TRT, Turkey’s public broadcaster, launched its Arabic-language station about a year ago. This was supposed to be the landmark for Turkey’s return to the region. What a return! Prime Minister Erdoğan has started his tour of North Africa right after the Arab Spring. He was disembarking the plane. All Turkish channels were broadcasting the event live. I switched to TRT-Arabic. I was just curious. And surely enough, during a historic moment for Turkey in the Arab World, TRT-Arabic was running a documentary on timber production in Turkey.
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A fundamental problem: The rigidity of unemployment
Fatih Özatay, PhD
17 September 2011
It appears that the increase in the LFPR has prevented the fall in the non-agricultural unemployment rate to the pre-crisis level to a certain extent. Yesterday labor force statistics for June were announced. Recently, the impact of the crisis on overall unemployment has vanished completely. Before the crisis (during 2006 and 2007), average unemployment rate stood at 10.2 percent. The adjusted unemployment rate stands slightly above 10 percent for the last couple of months. Similarly in June the rate was 10.3 percent. In a way, we have returned to the unemployment rigidity before the crisis at 10 percent level.
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Meanwhile on TRT-Arabic...
Güven Sak, PhD
16 September 2011
It is not France but Turkey that is the natural extension of Europe's soft power in its region. The Prime Minister of Turkey is making a successful official trip through North Africa nowadays. He is saying what is has to be said. He is showing in practice the role Turkey can play in the region. And the attention he is receiving signals that Turkey actually can play that role. In Cairo, the first stop of the trip, Mr. Erdoğan was welcomed with enthusiasm. I watched those moments on Turkish television with pride, as any other citizen of the Republic of Turkey. Only the Turkish channels had a live broadcast. Al Jazeera made no broadcast about the Cairo visit. I wondered what the Turkish Radio and Television (TRT) Association was broadcasting and took a look at TRT-Arabic channel. Guess what t
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What is the most likely optimistic scenario?
Fatih Özatay, PhD
15 September 2011
Growth will be below the potential if the external conditions reflect caution. Have the fate of economies been bonded so closely to the steps that a couple of leaders and some politicians, who are obsessed with their opinions about the economy and have no intention for any compromise? The shape the economic growth and unemployment will take in a number of countries depends on two main factors. First is whether or not Obama's new plan that aims to reduce tax rates in order to reduce unemployment and to increase the spending on education and infrastructure will be adopted by the Congress. Second is whether or not Europe will take immediate measures to prevent the collapse? More concretely, will it issue Eurobonds and exchange with these the current debt of troubled countries? Or will the Eur
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