World Economic Outlook from a short-term perspective
Fatih Özatay, PhD
18 April 2013
Concerning Turkey’s major trading partners, growth estimate was revised down by 0.2 points for European Union and by 0.3 points for Middle East and North Africa. The first World Economic Outlook Report of 2013 by the International Monetary Fund (IMF) was released. As you might know, the IMF releases first the technical chapters and later the complete report with core chapters. The latest report seems to have driven the most optimistic picture for the world outlook compared to its precedents. I would like to highlight some points which I think are critical.
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Why is Turkey an odd country?
17 April 2013
Our country’s agenda gets so odd at times that one inevitably wonders if such things happen in other places as well. Are we one of a kind? Is there any other country that has suffered from terrorism and high inflation for 30 years? Do they sentence their star pianists to prison for re-tweeting poems? Are the sidewalks of any other capital city, governed by the same mayor for 19 years, falling apart as they are in Ankara? Is what’s happening around us the normal flow of human history, or are we experiencing things that are peculiar to Turks?
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MPC decisions in April meeting
Fatih Özatay, PhD
17 April 2013
The Monetary Policy Committee of the Central Bank (MPC-CB) held its April meeting yesterday. The MPC decided to cut the policy rate and the interest rate corridor by 0.5 points. Also, it increased the reserve option coefficient, ROC, which determines the share of lira required reserves that banks are allowed to keep in FX.
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Monetary Policy Board convenes
Fatih Özatay, PhD
16 April 2013
Will the MPC reduce the policy rate? It might, by 0.25 points if it decided to cut the interest rate corridor. But it would be quite difficult to explain the grounds. The Central Bank (CB) Monetary Policy Committee (MPC) will hold its April meeting today. Below is a summary of developments concerning the variables the CB targets.
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Why would I bother with VC finance if I can put a plaza up over here?
Güven Sak, PhD
16 April 2013
You cannot develop breathtaking innovations if the legislation on intellectual property rights is not accompanied by a functional court system I heard this the other day. Garaj, the incubation center of the TOBB University of Economics and Technology, holds TechTalkThursday events, hosting a leading entrepreneur. Last Thursday’s guest was Numan Numan, venture capitalist and entrepreneur. He said this when he was telling about how he had opened his venture capital (VC) fund. He said: “One of the investors I visited when I was trying to raise funds for the VC said, ‘I am putting up a plaza over there; returns guaranteed. Why would I bother investing in your VC fund?’" I found this hilarious, and noted it down.
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Targeting real exchange rate and reducing volatility
Fatih Özatay, PhD
13 April 2013
The exchange rate regime almost becomes a pre-determined fixed-growth exchange rate regime. Before the latest shower of data, I was talking about a severe economic illness which many countries suffer. I referred to economies that have higher consolidated FX liabilities in comparison with their FX earnings. Economies that could not have completely normalized, in other words. Turkey is among these. In such economies, makers and executers of economic policy face a fundamental dilemma. But first, there are two points I want to stress.
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Welcome back to Israel
Güven Sak, PhD
13 April 2013
I was back in Israel this week. And I have to confess; it is good to be a Turkish traveler in Israel nowadays. Many ordinary Israeli citizens had the same reaction when they met me: “Oh, are you from Turkey? Welcome back.” On a personal level, it felt good to be back in Tel Aviv, to have dinner at Manta Ray. When the waitress there heard that I was from Turkey, she brought a bottle of champagne before taking our table’s orders. “We are friends again”, she said while serving the bottle and noting that it was on the house. So many “missed you”s, in the last couple of days. As I said, it is enchanting to be a Turkish traveler in Tel Aviv these days. At another of my favorite restaurants by the pier of Jaffa, at the Container, I met an Israeli clarinet player very fluent in Turkish
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If the US economy is ailing, why is the demand for $100 bills increasing?
Güven Sak, PhD
12 April 2013
Eighty-five percent of the dollars in circulation are in non-American pockets. There is no better confidence indicator than this. The Federal Reserve, or just "the Fed," prints the US dollar. It physically prints it, with printing machines, using ink and paper. A one hundred dollar bill is just a piece of paper with numbers and images on it. But everyone has confidence in it. Actually, everyone has confidence in the United States of America. People prefer the US dollar as a store of value. I guess the most favorite store of value for mattress-savers is the one hundred dollar bill. The rising demand for one hundred dollar bills shows that the crisis did not harm but strengthen the confidence in the US economy. The weakness of the new electronic currency, Bitcoin (BTC), is the strength of th
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Caution against over-information
Fatih Özatay, PhD
11 April 2013
I just want to stress that we have to be cautious and avoid over-excitation when using seasonally and working day adjusted series. Last time I said over-information might be problematic for people who try to interpret the information. For instance, for industrial output, raw, seasonally adjusted, and seasonally and working day adjusted figures are released. In fact, it is good that the Turkish Statistical Institute, TURKSTAT, releases all three series. But if not handled with care, the three “states” of industrial output cause misinterpretations.
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Possible scenarios of the government-PKK negotiations
Nihat Ali Özcan, PhD
11 April 2013
Turkish Prime Minister Recep Tayyip Erdoğan’s government is pursuing an Abdullah Öcalan-centered policy to resolve the Kurdish question. This policy not only empowered the jailed leader of the outlawed Kurdistan Workers’ Party (PKK), Öcalan, but also was a surprise for the society. Öcalan suddenly became the legitimate, powerful and sole representative of the new era. The current state of affairs is of vital importance for Turkey’s future, and the Kurds themselves, in light of the government’s strategy, regional developments and the conditions of the Kurds. The most important question is about the direction this process can take.I think there are four different scenarios. First of all, there is the best-case scenario in which everything goes according to Erdoğan’s plan: Öcalan an
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