Addendum to Hurriyet column: Job application to Central Bank of Turkey
Before I get to the more serious stuff, I should tell you that, commenting on my column at the Daily News website, two readers invited me to work for the government. I sincerely thank them for the kind words & compliments, but I doubt the current government would want to have me:). I know several people who were passed for promotion because they were not hard-core, partisan supporters of the government. One of them resigned from the Central Bank and is now a very successful economist at the IMF. Another is being sent to an outpost; he luckily ended up with a good position at the Turkish Consulate in NYC. To make a long story short, I don’t think creating a meritocracy is as important as a loyal bureaucracy in the government’s agenda, and anyone in the government who has read my columns would not hire me even if you put a gun on her head:) But I should tell you that this favoritism is not specific to the AKP government; it is more of a Turkish state tradition:) BTW, I did work at a think-tank in Ankara for one and a half years, and although we were doing too much tanking and not enough thinking, we did a lot of work with the government, so I may count as having worked in the government. It is not for everyone, but I definitely would recommend all Turkey economists to try it for a while. Seeing how Ankara works is a very valuable experience.
Coming to more serious matters, the gist of my argument in the column is as follows: I am not debating whether the economy is overheating or not. I think it is; the Central Bank does not agree, and that’s OK. The problem is that the CBT, despite a very qualified Research Department, is not providing sufficient proof to their arguments. This could mean two things: The CBT expects us to take what they say as Gospel. Or they simply cannot support their arguments with analysis. I hope it is the former…
Not only is the CBT not mentioning supporting research to their arguments, its arguments are changing more rapidly than Rorschach’s mask, with its measurement of whether its policies are working in curbing credit being the case-in-point. Ozgur Altug from BGC Partners provides the excellent summary:
“The CBT and Government first announced that they will target a y-o-y loan growth of 20-25% for 2011. At that time y-o-y loan growth was 33.7%, but now y-o-y loan growth accelerated to 36.4%. Then, the CBT switched its preferred measure and hinted that market players should look at “change in loans to GDP” ratio and we commenced to follow the data. In January, this ratio was 12.0 and as of May 13 the ratio broke a new record and reached 13.7 instead of posting a decline. Finally, the Bank came up with new proxies in order to scrutinize the loan growth. In this research note, we analyzed these new proxies. Our conclusion is that by using ‘statistics’ the CBT is trying to convince itself and financial markets that its new monetary policy mix has worked out, but we disagree. However, we think that it will work out later in the year together with the help of seasonal factors. Hence, additional measures are required before it is too late, since it is clear that more time is needed to see the impact of monetary measures.”
This does not seem effective and credible communication to me, but I guess that’s why you need the Deptrue:):):) BTW, you can read a bit more about my point about the NAIRU at an old Hurriyet column.
Changing gears, P.M. Erdogan made the zero-real interest rate argument again, with support coming from Suluman the Economist, who had got my attention earlier with his insightful analyses, claiming that interest groups against zero real interest rates were aligning together against the AKP. This follows Erdogan’s earlier comments that high interest rates cause inflation. I’ll let my friend (and “abi”) Murat Ucer of Global Source and Turkey Data Monitor handle this one:
“There is little doubt in our minds that the economics of Mr. Erdogan’s reasoning is close to preposterous. Without wasting too much time over it, it suffices to say for now that: 1) the so-called ―neutral‖ real interest rate, i.e. the rate at which the economy grows close to its potential, should be reasonably positive for a relatively young and fast growing economy such as Turkey’s; and 2) the idea that (sustained) inflation is solely caused by higher interest rates would probably be dismissed, even by the most extreme Latin American ―structuralists‖ (i.e. the ―cost-push‖ guys) of the 1960s.”
Josh, the Network Editor for Roubini Global Economics, had told me, before starting off at Economonitor, that anything is game except for foul language and insults. So I am now wondering if this post is OK: Not because of what I wrote, but Erdogan and Suluman the Economist’s sayings could easily be interpreted as an insult to economists and the Economics profession:) And I apologize for the hyperlinks in Turkish; as I noted in my introductory post, this will happen from time to time, but I am trying hard to keep it to a minimum…
Finally, I got a couple of questions about the graphs at the column: All of them are from Turkey Data Monitor; the hyperlink has a contact number and email…
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