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2021: A brave new world?

WELL, that is the end, folks! We have finally come to the anti-climax and first, all positive expectations, and then all the calamity forecasts are borne out by events; they have become realities. The new era is not only characterized by lower interest rates, but also by lower growth throughout the global economy. It is...

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Endogeneity of the money supply and credit

IT IS TIME to offer a few guesstimates on what 2021 may bring. My focus is on the Turkish economy and finances. First, a very quick reminder of what has happened over the last three years. I am concentrating on monetary policy only, not on structural weaknesses and such. I emphasize endogenous money, and don’t...

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Bringing back economic serenity

Finally, the Central Bank has come to the rescue. True, there is a shortage of funds to rekindle investments. Again, it is no secret that net reserves are about minus USD 45bn. Also, it would take more than one step to convince households – let alone high net worth individuals, who would obviously behave defensively...

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Policies and polities

MANY excellent economists have observed that globalization is a “golden straitjacket”. Many authors who have related openness to growth and so forth have discussed just how golden the jacket is. But how strait are the constraints imposed by financial openness on macroeconomic policies has not been equally accounted for. The “under-researched” situation of the trilemma...

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Covidonomics

AS INFLATION reached 14% in November, elements of covidonomics gathered a new meaning. Isn’t it odd that as economic activity weakens, demand for tourism-services-restaurants shrink, travel and all that collapses globally, productivity falls and supply chains are in a deadlock, and inflation goes up? Certainly awkward, but then no country has experienced such currency depreciation.At...

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Economic theology

THERE are signs that a mini-rally may have started, especially in the currency market. Unless monetary policy loosens, there is a possibility that the lira will equilibrate around about what is at currently for some time. That would be 7.50-8.00 perhaps, unless something more radical imposes itself or is administratively orchestrated successfully so confidence is...

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Monetary policy games

FINALLY, the CBRT showed a clear opening that made sense to all. After all, monetary policy is a game, maybe like chess. As such it isn’t tightening per se because the effective funding was already at 14.80% the day the policy rate was raised to 15%, but a return to normalcy in the monetary policy...

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Games and gaming

THE resignation of Minister Albayrak played havoc with financial markets for almost a day although the lira gained value a bit. However, this had nothing to do with the resignation per se, or so I think. It had more to do with global markets and the news that the new CBRT Governor could raise the...

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Constitutional quandaries

THERE are many instances of sudden belief changes or ‘belief cascades’, strategic voting, and grand coalition formations in American political history – obviously also in world history. Consider the Madison- Jefferson equilibrium – as Norman Schofield has put it – of the 1790s that led to Jefferson winning in 1800 as a result of the...