Unemployment rate and monetary policy
Fatih Özatay, PhD
22 January 2011
In my last commentary I stated that inflation targeting regime aims to keep inflation rate at the targeted level and unemployment are at a rate considered to be 'normal'. Of course which one of these two aims are prioritized depends on the state of the economy at the questioned period.
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Have you ever installed a line at the power plant of the district?
Güven Sak, PhD
21 January 2011
Two Turkish firms producing electricity power plants have turned into giants of the sector thanks to the rising demand in the Iraqi market
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Monetary policy and the status quo
Fatih Özatay, PhD
20 January 2011
Monetary policy facilitates change in the status quo. The status quo cannot be influenced via interest rate policies. Finally in yesterday I have sent the textbook I have been working on for more than a year to the publisher firm. I hope that I have nothing to do but control the next rehearsal. 'I hope' because over the last months I read nothing but academic articles that would be of use for the book. In a book or symposium report, I cannot remember which one it was due to the above mentioned fact that I read nothing but academic articles on my book, I came across a discussion about how important it is to abolish the inflation targeting. I have heard about this argument also in another platform recently.
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Arbil looks increasingly like Turkey
Güven Sak, PhD
18 January 2011
The bigger the opportunity, the bigger the responsibility. We have a lot to do. I have been in Arbil for a couple of days. Arbil is the capital of the Kurdish Autonomous Administration in Iraq. Last week I was in Sana, Yemen's capital. Arbil does not look at all like Sana. Let me explain why I think Arbil is different. Are you ready for some comparative impressions?
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Stability
Fatih Özatay, PhD
18 January 2011
If we are proud of the stability Turkey achieved, we have to take a look back. Are we contended or not? Today let me begin with a question that I am obsessed about recently: is securing stability sufficient? The day before, the lower-screen sidebar, the classic of economic news channels, said that Portugal and Italy have accomplished to sell some amount of bonds: Thank God, they have survived 'successfully' the auctions that have been waited with anxiety. The countries have taken a big step to finance their budget deficits. What is more, financial investors did not even charge extra interest fees. Interest on bonds stood below the 'threshold limit'. How perfect.
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No profits, no sector
Güven Sak, PhD
14 January 2011
The problem in the animal breeding sector can be solved with a policy that guides the firms Signs started to emerge in December. First Banvit and than Koç Holding declared that they would stop breeding for red meat production. What this means is that the Ministry of Agriculture and Animal Breeding has once again taken the wrong path with respect to its animal breeding policy. The problem originated due to the wrong animal feed policy. This time the ill-designed carcass meat importation policy was to blame. Turkey, which is going through a process of deindustrialization, does not perform well in the animal breeding sector, either. Recently, Minister Mehdi Eke successfully explained why we are way off base. His statement had two parts, each of which conflicted with the other.
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Others' perceptions and growth
Fatih Özatay, PhD
13 January 2011
Many EU countries struggle with public budget deficits and public debt whereas Turkey does not have significant problems in this respect. In the market economy of the East, surveys on consumer and investor confidence are conducted and the results are used to generate indices. There is an important motivation for this: there exists a significant correlation between the consumption the private sector is planning to make and the confidence in the economy. Even if your income remains constant, interest rate does not change, prices do not move or your wealth does not improve, you might still increase consumption if you are hopeful about the future. On the contrary, if you believe that things are worsening, you might prefer to save some money out of fear.
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Suleiman the Magnificent and the resource problem
Fatih Özatay, PhD
11 January 2011
We have to initiate a number of reforms in order to alter the status quo which Suleiman the Magnificent would not like. Last week officials of the ruling party raised some criticisms about the new economic policy proposals the CHP (Republican People's Party) declared as a part of their new economic program. The criticisms raised were mainly about how the necessary resources will be generated. Today I want to focus on two things that the questions about how to generate funds raise in my mind.
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Can the budget deficit be remedied by raising oil prices?
Güven Sak, PhD
11 January 2011
Those wondering when Turkey's credit score will be upgraded must start thinking about how Turkey's public savings can be improved. Public finance was the top priority agenda item of the last week both in Pakistan and the USA. The United Kingdom, Bolivia and Algeria have recently taken similar steps to improve public savings. Turkey also has followed this path to improve public savings and has raised oil prices. The qualifications of the steps taken to this end give hints about the quality of the public finance system in a country. According to this, there are two types of countries: those with a modern public finance system and others. Turkey is among the latter. This is the first thing those wondering why Turkey's credit score has not been upgraded should check.
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“No wise man enters the industrial sector in this milieu”
Güven Sak, PhD
07 January 2011
I hear the above statement in different forms with increasing frequency these days. Yesterday, the Industrial Strategy and Action Plan was announced. The timing could not have been more suitable. I believe that in the current milieu it is of critical importance to issue an industrial strategy if only just to stress that 'industry matters.' Let us examine why the statement "No wise man enters the industrial sector in this milieu" has become so popular lately.
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