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March 2022

 Brace for impact - 2022 has been a year full of uncertainties for the global economy so far, and it looks like it will continue. Rising inflation, the invasion of Ukraine, and supply chain problems arising from China and Russia… None of this makes the Fed’s job any easier. But even before all this, the Fed had begun to […]

November 2021

The Long-Run Effects of Monetary Policy on Interest Rates - After reading Scott Sumner’s recent paper on the Princeton School of Macroeconomics and Zero Lower Bound, I revisited papers of other Princeton economists.[1]Sumner, Scott, The Princeton School and the Zero Lower Bound (October 2021). Mercatus Center Working Paper, https://www.mercatus.org/publications/monetary-policy/princeton-school-and-zero-lower-bound In the second part of the paper, Sumner discussed the Princeton School’s relationship with new schools […]

October 2021

Sticky Wages: The Key Problem of Macro - The reason we worry about recessions is mostly involuntary unemployment. Because recessions cause employment fluctuations, and this affects the entire economy. But, why do recessions cause employment fluctuations? Indeed, this question is one of the most important questions at the heart of macroeconomics, and it shows us why nominal variables and wage stickiness is so […]

September 2021

IS-LM is not a useful model - I have to admit that I have rarely used the IS-LM model since I became interested in economics. Instead, I find the AD-AS model much more useful. Of course, this does not mean that there is a major theoretical flaw in the IS-LM model. Rather, I think that the inferences that economists make by looking […]
Indicators of A Good Monetary Policy - There has been a heated debate lately about whether inflation is transitory or not. I think I caught this discussion a little late, but for various reasons, it took me quite a while to finalize this post, and I see no reason not to share it now. Note that most of the post was written […]

August 2021

A Personal Note - First of all, I have to say that this post will be radically different from other posts on my blog. I’ve never written a personal post here before. Of course, there were texts where I shared my personal feelings, but I shared this in Turkish on Medium and did it (dare to say) more poetically. […]

June 2021

Random thoughts on economics - I think most people understand the supply and demand less than we think. That’s because supply and demand are more confusing and complex than what is taught in mainstream EC101 lectures today. Maybe you don’t think so, but I do. Suppose we asked students who have already taken EC101&102: “Oil prices fell. For this reason, […]
There is no reason to worry – yet - The Fed announced the CPI for May: 0.6% is still at a fast pace. But I don’t think we should worry. The rates announced so far match Claudia Sahm’s predictions: If we look at the PCE index, inflation has started to made-up its dip in 2020, but this does not necessarily imply that tightening is […]

May 2021

Economics failing us. What about the EconTwitter? - There has been a buzz on EconTwitter and academia lately. I think the first thing I saw on this was Tyler Cowen’s post, where he compared blogs and Twitter. Although I preferred to use Twitter until last year, then I opened this blog for my own reasons. Even though it is a topic that I […]
Can overshooting also cause recession? - In recent years, the Fed predicted inflation would be below the target. For a while, inflation remained below 2%. It has risen above 2% this year, and it looks like it will stay around for a while. Actually, this situation itself is not a problem. Last summer, the Fed switched to “average inflation targeting,” which […]
Is rationality the new stupidity? - On Twitter, I come across dozens of different bad analyzes, especially about economics. This is just one of them: You might think it’s stupid for people to stockpile things like gas. And, of course, you can also share it and laugh. However, just because you think something is stupid doesn’t make it stupid. The real […]

March 2021

Are you worried about inflation? Don’t be - Last summer, the Fed switched to “average inflation targeting.” The Fed’s main goal is to ensure that the PCE inflation will average around 2% over the long term and that future overshoots will compensate for any short-term discrepancies. Although a starting point is not specified, we can assume that January 2020 is the beginning. Therefore, according […]
NeoFisherian experiment in Turkey: Here we go again - Yesterday Erdogan dismissed the head of the Central Bank of the Republic of Turkey’s, Naci Agbal, and replaced him with professor Sahap Kavcıoglu. In a previous post, I claimed that Turkey has willingly or unwillingly adopted a kind of NeoFisherian policy. In this post, I will discuss this case within the framework of this hypothesis. […]

January 2021

Pro-Market but not Pro-Business - For context, read this. Here’s my take: I see GameStop as a giant poker table. The only difference from a regular poker game is that an outsider periodically adds more money to the pot than players have. Everyone is aware that they are (or should) gambling and they have accepted the possible consequences. I have […]
Aggregate Demand is not what you think - Scott Sumner has a new piece arguing that supply and aggregate supply are unrelated and misnamed: The AS/AD model that we teach our students is misnamed, as it has nothing to do with the supply and demand model used in microeconomics. To take one simple example, the vast majority of industry supply curves are almost […]
The Course of Empire: Banana on the Potomac - “Democracy is the most delicate flower in the world. It is tolerance, compromise, and dialogue that makes it alive.” What happened in the United States today is only a teaser of the vandalism that will be faced when the general principles that sustain liberal democracies are eroded over time. The Principle of the Rule of […]

November 2020

Further thoughts on the election and voters - The post-election events showed that the United States is far ahead on the road to becoming a banana republic. Before the 1990s, only the 1960 election was considered dubious. On the other hand, rumors of election fraud spread about the last four presidents. The Supreme Court stole the 2000 election. (According to Trump and his […]

October 2020

How is that NeoFisherian experiment going in Turkey? - Here’s the Financial Times: Turkey’s central bank has dented hopes for a return to economic orthodoxy, ignoring calls from many investors to raise its main interest rate and sending the lira to a new record low. The currency fell more than 2 percent immediately following the decision to keep the benchmark one-week repo rate on […]
Market Monetarism is more than NGDP Targeting - It’s true that I prefer NGDP Targeting like many other market monetarists. But I also think the Fed did a pretty good job during the Grand Moderation without NGDP Target.In fact, market monetarism is mostly about another set of ideas. The important thing here is to keep in mind that NGDP targeting is not on […]
This is not our grandfather’s recession - Scott Sumner wrote a post that the Keynesian model could not explain the recession we were in recently. Although I fully agree with Sumner, I intend to emphasize a few points. Let’s first look at this graph showing PCE and disposable income: The Keynesian models we have do not show that NGDP will drop 33% […]
Rethinking Macroeconomics - For a while, I have been trying to turn my views on macroeconomics into a complete system. This post will summarize how I approach macroeconomics from my market monetarist framework. However, keep in mind that I am only summarizing the core components.
Original Sin of the Macroeconomics - I’ve been reading articles on the Keynesian/NeoFisherian debate for a while. It’s an interesting debate for me. Before commenting on the debate, I’d better start from the Great Recession. After the Great Recession, three “heterodox” objections arose in monetary economics – schools of thought that reject the mainstream models. In my opinion, all three objections […]

September 2020

You are not in Turkey - Scott Sumner recently wrote a post listing some of the features of banana republics. For my country, Turkey, it is obvious that almost all are correct(except #15). Considering that the same government has existed for 20 years, it might be worse not to have that. From this point of view, Pelosi’s statement becomes more meaningful. […]
Grasping the Root - The Joint Economic Committee recently published a new annual report, written by Alan Cole. In my opinion, the report is ten times better than all of the qualified economic journals written in 2020.It’s not possible to review the entire report here, but I will share some parts that I like. Let’s start with the Great […]
Lessons From the Past - Studying pre-modern economic history and economic trends can teach a lot. You can take many different perspectives, especially when studying the first invention of money, the Roman period (specifically the 3rd-century crisis), and the High Medieval economy. Years ago, while studying pre-modern economic history for the first time, I wondered how money was invented. Until […]
Blooming Hopes - Market monetarism has a unique position among macroeconomic schools of thought, as it is established on the Internet (specifically in the blogosphere). Of course, this has advantages as well as disadvantages. The biggest advantage is that it is the first and a pioneer in this regard. It seems obvious to me that this has made […]
The Fed’s New Strategy: Tiny Steps Forward - Many experts seem to have mixed feelings about AIT. While some experts are sure that AIT will be disastrous, pro-free market economists tend to view the situation as a rejection of Keynesian Phillips Curve models. The paragraph that caught my attention in Powell’s speech was this: “Our revised statement says that our policy decision will […]
About This Blog - Welcome to my blog on the interminable problems of macroeconomics, especially monetary policy. Veteran blog readers will quickly notice that I am not a common blogger, yet I could no longer resist the positive feelings about starting this blog. All of the recent events(the recession due to covid-19, adoption of FAIT, etc.) show that we […]