The Kapali Carsi

  • Ignorance Is Strength

    One of the maxims of Oceania, George Orwell’s fictional super-state in 1984, is ignorance is strength. That definitely seems to be true for analyzing the Turkish economy.

    For example, it is often assumed that there is a one-to-one relationship between inflation, the output gap, which is simply how far away the economy is from potential output, and Central Bank, or CBT, policy rates. As a result, a stronger-than-expected growth outturn, like the GDP readings from the last quarter of 2009 released at the end of March, can cause some to pencil out their inflation and policy rate forecasts for higher numbers.

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  • The Turkish Rainbow Tour

    People of Earth, I present you the Turkish success story:  

    The latest growth data has shut out skeptics like me for good and proven that the Prime Minister was right after all; the crisis has really passed tangent to Turkey. Never mind that other than the stronger-than-expected private consumption, which caused economists’ forecasts to undershoot, the growth figures of the last quarter of 2009 are more or less in line with expectations.

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  • On the Turkish Fiscal Rule

    I have got quite a few questions on the fiscal rule. I guess people feel that with the IMF gone, it really becomes mostly fiscal, especially with elections approaching, and the fiscal rule is a big part of the fiscal picture. Anyway, with questions pouring in, I decided to devote a blog post to the issue rather than copy and paste the same email.

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  • The Rite of Spring

    In “The Unanswered Question – Six Talks at Harvard,” Leonard Bernstein notes that Igor Stravinsky’s masterpiece has got the best dissonances anyone ever thought up, and the best asymmetries and polytonalities and polyrhythms and whatever else you care to name.

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  • A Little EMFathy with Greece

    These days, I am trying to find a good lawyer so that I can sue German finance minister Wolfgang Schäuble for copyright infringement.

    During my stint in D.C., I was scheming on setting up a competing monetary fund at the empty lot across the street from the IMF and call it the EMF, or Emre’s Monetary Fund. This ingenious idea never took off because somehow, I wasn’t able to solve the financing. Mr. Schäuble came up with the same acronym last week, suggesting a European Monetary Fund, which would act as a lender of last resort to cash-strapped countries such as Greece.

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  • The End of a Long-Running Soap Opera

    You probably heard the news, but if you haven’t, the Turkey-IMF saga has come to an end:

    For my part, I am really happy for my good call, done at a time the consensus view was that the agreement would be sealed in a matter of weeks, if not days:

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  • The Misleading Political Calm in Turkey

    Turkey suddenly came into the spotlight two weeks ago with the arrests of more than five dozen military officers, some of them still on active duty, for an alleged coup plot that would put even the most imaginative Hollywood screenwriters to shame.

    The plan, codenamed sledgehammer, was alleged to include the bombing of a major mosque, planting of weapons at the headquarters of religious sects and the gunning down of a Turkish fighter jet (which would be blamed on Greece), all to create the necessary circumstances for a military takeover.

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  • Quiet Before the Storm in the Balkans

    When the Greek crisis hit, the biggest concern of economists following the region was Greek contagion. With their significant trade, foreign direct investment, or FDI, and banking exposure to Greece, the Balkans looked particularly vulnerable.

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