Why do we need additional measures?
Fatih Özatay, PhD
06 January 2011
We can expect to hear new policy decisions. I am looking for an answer to the question I put on Monday: Will the measures introduced by the Central Bank of Turkey (CBT) and the Bank Regulation and Supervision Agency (BRSA) enable a slowdown in the hike in credit demand? In fact statements by the Central Bank when declaring the decisions and New Year's greeting speech by Minister Ali Babacan sort of give an answer to this question. The common feature of the statements is that new decisions are soon to come.
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An unmanaged economy accumulates risks
Güven Sak, PhD
04 January 2011
2011 will be the year to avoid behaving like Procrustes. Administrators had better be cautious. 2011 will be a year requiring cautious economic administration. As everyone is giving a name to the year, let me add my own. I think 2011 will be the year to avoid behaving like Procrustes. Let me tell you why.
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Distinguishing feature of the economy in 2010
Fatih Özatay, PhD
03 January 2011
Different than 2008 and 2009, current account deficit was financed through short term fund inflows in 2010. Now it is time to answer the question on the most distinguishing feature of the year 2010 considering Turkey's economy. It is actually quite an easy question to answer: In 2010, the channel of financing current account deficit changed radically. And unfortunately this change is in the adverse direction and highly dangerous.
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Some distinguishing features of the economy in 2010
Fatih Özatay, PhD
02 January 2011
What is the unchanging characteristic of Turkey's economy? When you think about the most distinguishing feature of the year 2010 considering Turkey's economy, the radical change in the finance of current account deficit comes to fore by far. I will deal with this tomorrow. When you think about the constant feature of the economy in the year 2010, there appear a number of elements. Today let me talk about two of them. First is that it was a year where no step was taken to change the status quo. This is such an important element; but I will not talk further on this for now. The second will allow self-criticism; so let me begin with that.
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MOBESE doesn’t count
Güven Sak, PhD
31 December 2010
Investment on MOBESE for instance are also counted as public expenditure. Recently the Honorable PM of Turkey, Tayyip Erdoğan, visited Mardin, I guess. What happened was what normally happens in a small town visited by the PM, in the same order as it always has. The Honorable PM naturally will deliver a couple of speeches, which is the main point indeed. And at that exact point, Mr. Erdoğan said, "We have made an investment in your city for the new surveillance system, the Mobile Electronic System Integration Project (MOBESE)." And he went on to talk about other public expenditure items. It was quite surreal. So today let me argue that "MOBESE does not count." If you wonder what I mean, please read on.
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Where can Turkey go with this zero-reform policy?
Güven Sak, PhD
30 December 2010
There is a big difference between pre and post-2007 Turkey. Leaving behind the politically and economically unstable country image, Turkey started the second millennia with an ambitious reform program that stabilized most macroeconomic parameters. Add to this the European Union accession process that brought a series of political reforms aimed at strengthening democratic standards as well as free-market institutions. Then came the general elections in 2007, closure case against the AKP in 2008, local elections in 2009, and of course the global financial crisis. We have seen no major structural reforms in the Turkish economy ever since 2007. Global crisis has led the government to basically a period of wait and see. The only reform attempt that has started and been completed is the ban on s
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Rapid credit expansion
Fatih Özatay, PhD
30 December 2010
There is bulk of evidence that rapid credit expansion is risky. The pace of expansion of bank credits is really dazzling. Today I want to examine the movements in credit volume net of price movements from 2004 to present. I started the period of analysis with the year 2004 as it is the year when the credit volume of the banking sector hit severely by the 2001 crisis re-achieved the pre-crisis level in real terms.
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World War I has ended just in 2010.
Güven Sak, PhD
28 December 2010
How will 2011 be for Turkey's economy? What will be the determinant factors?
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A criticism about the CBRT
Fatih Özatay, PhD
27 December 2010
I know no academic research stating that current accounts are a tool for monetary policy. On Thursday I dealt with the recent decision of the Central Bank of the Republic of Turkey (CBRT) in terms of the aspect I supported, which is the fact that the Bank breaks the routine. On Sunday I referred to risks: particularly the absence of a direct limit to short term capital inflows elevates the risk that the decisions will prove ineffective. And today it is time or a critic.
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The sin of CBRT
Fatih Özatay, PhD
26 December 2010
What are the risks incurred by the latest TCMB decisions? With latest decisions the Central Bank of the Republic of Turkey (CBRT) has been trying to establish a monetary policy framework in the context of the changing circumstances that regards price stability together with financial stability as far as its Law allows. I have underlined in my recent commentaries that the CBRT is doing the right thing in highlighting financial stability alongside the price stability in the face of highly uncertain global circumstances. So now it is time to highlight the potential risks.
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