Demiralp: Turkey's Economic Woes Due To Past Mistakes

The video discusses Turkey's economic challenges, including a technical recession and high inflation. Despite significant rate hikes, inflation remains high due to weak central bank credibility and accommodative fiscal policy. Public confidence in the central bank is low, affecting inflation expectations. The video also explores potential policy shifts by President Erdogan, who believes in lowering interest rates to reduce inflation, contrary to orthodox economic views.

What is one reason for Turkey's high inflation despite rate hikes?

• Strong central bank credibility

• Accommodative fiscal policy

• Stable economic growth

• Decreasing demand

How did past policy mistakes affect Turkey's current economic situation?

• They strengthened the central bank's credibility.

• They led to a decrease in inflation expectations.

• They caused a loss of confidence in the central bank.

• They resulted in a stable inflation rate.

What is a potential consequence of cutting interest rates according to orthodox economists?

• Increased inflationary pressures

• Reduced demand

• Decreased borrowing costs

• Stable economic growth

What is President Erdogan's belief regarding interest rates and inflation?

• Higher interest rates will reduce inflation.

• Lower interest rates will increase inflation.

• Lower interest rates will reduce inflation.

• Interest rates have no impact on inflation.

What challenge does the central bank face when considering rate cuts?

• High inflation rates

• Stable inflation expectations

• Low borrowing costs

• Strong economic growth