Engin YILMAZ
Economist, Researcher, and Associate Professor -Economics.
Welcome to my Substack! I'm Engin Yılmaz, an economist with extensive experience in Money, Money Creation, Monetary Policy, Fed, Fed Balance Sheet, MMT, CFA 101, Python, Blockchain Mechanisms and Tokeneconomics. With over a decade of professional involvement, I've honed my expertise in various facets of economics, particularly focusing on the economy, fiscal policies, and monetary theory.
Professional Journey:
Specialist at Turkish Ministry of Finance (Jan 2006 - ): …………….
Lecturer at Ankara University (Feb 2018 - Jun 2023): Sharing my knowledge on the Economic Development of Latin America, blending academic rigor with real-world insights.
Visiting Researcher:
Universidad Carlos III de Madrid (Jan 2015 - Dec 2015): Engaged in research on econometric modeling of government revenue in Turkey.
UNAM, Mexico (Mar 2011 - Feb 2012): Conducted a detailed analysis of Tanzi and Automatic Stabilizer Effects on Turkey’s economy.
Publications:
"Eurodollar Deposits in Turkish Banking System" (Workshop on Turkish Economy, Oct 5, 2023): The Eurodollar market refers to the market for U.S. dollar-denominated deposits held in banks outside the United States. The Eurodollar market has become increasingly important as a source of financing for businesses and governments in the emerging countries. The emerging markets provide access to U.S. dollars without the need for foreign exchange controls or other restrictions. However, the Eurodollar market can also pose risks to these countries, particularly if there is a sudden withdrawal of funds or a sharp depreciation of the U.S. dollar. As such, it is important for policymakers in emerging countries to carefully manage their exposure to the Eurodollar market. Turkey is a medium-sized economy integrated into the world capitalist system. The external dependence of the foreign trade structure of this country makes it dependent on the inflow of foreign currency in all respects. The foreign currency deposits increased due to both Eurodollar loans and the conversion of local currency deposits into foreign currency by banks in Turkish banking system. This poses the great risk for Turkish banking system and Turkish economy. I will evaluate the position and evolution of foreign currency deposits in the Turkish banking system for the period 2002-2023 in this article. I try to clarify how the disruptions in the global dollar system or Turkish economy might affect the foreign currency deposits in the Turkish banking system and what measures the government has taken in this regard.Link
Who creates the money ? A Python code-powered narrative based on balance sheets We debunk the 70-year-old lie that banks make loans by collecting deposits. Banks create deposits by making loans. "A didactic and colorful examination of one of the fundamental Neoclassical fallacies of mainstream economics in the field of money and finance. Recommended not only for economics students but also for anyone interested in the subject. Link
"New Monetary Analysis Tool (The Daily Liquidity Dataset)" (Ekonomista, Jan 7, 2020): The term of liquidity is complex and unclear concept in the economic literature. This paper tries to explain this concept in practice for Turkish economy. The statistics of EFT (Electronic Fund Transfer) system and Central Bank of Turkish Republic’s analytical balance sheet are used to explain what the liquidity is and how the liquidity situation changes in the Turkish financial system. The liquidity is classified as “market liquidity”. The EFT system is used to materialize the market liquidity and the statistics of EFT system are used to explain the volume of market liquidity. The statistics of Central Bank of Turkish Republic’s analytical balance sheet are utilized for illustrating the liquidity situation which is originated from market liquidity. The daily liquidity dataset for Central Bank of Turkish Republic is created and the determinants of the liquidity situation are analysed from perspective of analytical balance sheet. This study identifies that the increase in the currency issued and government sector deposits are main determinants of the liquidity deficit and also concludes that the liquidity surplus results from the increment in net foreign assets and domestic assets. Most importantly, this article shows that Central Bank of Turkish Republic takes a countercyclical position against both the liquidity deficit and liquidity surplus between 2013 and 2018 (except 2016). Link
"Modern Monetary Theory and Policy Suggestions" (Ekin Yayınevi, Dec 31, 2019): In 2016, Donald Trump won the presidential elections in the United States of America, but the world got to know Bernie Sanders. Sanders offered solutions that were different from the policies that the 2 major groups in the country (democrats and republicans) had been offering to the American people for a long time. The concrete form of these policies is the "New Green Deal" put forward in 2019 by Alexandria Ocasio-Cortez, a member of Sanders' team. The foundations of the New Green Deal were produced by Modern Money Theory, which is the subject of this article. The group, supported by the Sanders group, had the opportunity to spread their theoretical ideas, which they had been working on theoretically for nearly 20 years, to the world and opened a door to put their ideas into practice in the world's largest economy. This article will try to explain the basic views of the Modern Monetary Theory.
"Cross-currency Swaps and Local Credit Money Creation in the Turkish Banking System" (Edward Elgar, Dec 17, 2019): This article tries to indicate that the growth of disproportional local money loans in Turkish banking system results from cross curreny swap transactions during/after the global crisis and these transactions change the composition of Turkish banks’ liabilities in favour of non-deposits FX liabilities. This is great risk for Turkish banking system because growth of the system needs the non-deposits FX liabilities and the lack of non-deposits FX liabilities can result in severe depression in the Turkish banking system.
How the Federal Reserve Influences the Market Interest Rate (before and after 2008): Mainstream macroeconomics textbooks still describe the situation before the 2008 financial crisis in terms of how the US Federal Reserve (FED) tries to influence the market interest rate. However, this situation has changed drastically after the 2008 crisis. Namely, while before the 2008 crisis, the FED used to change the amount of reserves in the system and use the announcement effect within the framework of the target interest rate, after the crisis, it directly affects the market rate through the floor system, which is a derivative of the corridor system. In the new system, the amount of reserves has lost its role in influencing the interest rate in monetary policy. In simple terms, the Fed's policy before the crisis was to try to influence the interest rate by changing the quantity of reserves and using the announcement effect, whereas after 2008 it tried to influence the market rate by setting the target rate equal to the floor rate. This paper will illustrate the main differences between the two periods.
"Forecasting Fiscal Aggregates in an Emerging Market Economy: The Role of Macro Variables and Fiscal Plans" (36th International Symposium on Forecasting, Jun 20, 2016): In this paper we develop a comprehensive short-term fiscal forecasting system specifically designed for the Turkish case, an interesting case study for several reasons. First, Turkey is one the most relevant emerging countries. Second, this issue has not been systematically analised in the scarce related literature. Third, UE adhesion seems to be speeded up in the incoming months and fiscal surveillance will need of stronger supervision tools. The system is made of a suite of models, with different levels of disaggregation and composition (including or not macroeconomic indicators). The models are time-series, mixed-frequencies models along the lines of Harvey and Chung (2000), Moauro and Savio (2005), Proietti and Moauro (2006), and Pedregal and Pérez (2010), for which the starting point of the modeling approach is to consider a multivariate Unobserved Components Model known as the Basic Structural Model (Harvey, 1989), suitable to deal with non-stationary time series. These papers use a temporal aggregation method that relies on the information contained on related indicators observed at the desired higher frequency. The statistical treatment of structural time series models is based on the state space form and the Kalman Filter. Our tools are instrumental for ex-ante detection of risks to targets fulfilment, and thus can help in reducing the ex-post reputational costs of budgetary deviation. All in all, our results will allow official monitoring bodies to expand their toolkit to evaluate regular adherence to targets and improve their communication policies as regards sources of risks of (ex-ante) compliance.
"Forecasting Tourist Arrivals to Turkey" (Tourism: An International Interdisciplinary Journal, Dec 28, 2015): Two different models are developed to forecast the total tourist arrivals to Turkey using monthly data for the period 2002-2013. The results of the study show that two models provide accurate predictions but the seasonal autoregressive integrated moving average model produces more accurate short-term forecasts than the structural time series model.
The Determinants of Price Frequency in Turkey: The effect of monetary and fiscal policy on the output depends on the frequency of price changes. When the prices change infrequently or prices change slowly, monetary and fiscal policy have a real effects on the output. Developed countries generally have a rigid prices but developing countries have a relatively flexible prices. This difference is originated from the reality that the developing countries have higher average inflation than the developed countries. Economic literature focuses on the micro reasons of the frequency of price changes, on the other hand, the inflation is seen the main factor which affects the frequency of price changes in the macro perspective. This study holds down the assumption that the frequency of price changes is a function of the inflation rate in the macro perspective. In addition to this, it is also focused on the direct relationships between the frequency of price changes and the macro variables which affect the inflation rate. It is revealed the effect of macro factors on the frequency of price changes in this work. It is concluded that the determinants of the frequency of price changes in the macro perspective in Turkey are the expected inflation and the exchange rate rather than output gap. It can be said that firms’ price frequency behavior directly depends on cost push factors in Turkey.
Turkish Non-Core Bank Liabilities: Developed countries implemented a loose economic policy after the global crisis, which encouraged huge capital inflows into the emerging markets. After the global crisis, the Turkish banking system took advantage of such foreign capital inflows and experienced significant credit growth. This paper focuses on noncore liabilities, which are the sources of the credit growth in the Turkish banking system. It seems that the Turkish banking system has depended more on noncore liabilities since the beginning of 2011. Most of the non-core liabilities of the Turkish banking system are largely foreign exchange denominated and the average term structure of foreign exchange liabilities is relatively medium-term. Foreign exchange non-core liabilities of the Turkish banking system have been more sensitive to international liquidity shocks. Non-core liability growth and its medium-term foreign exchange structure are a warning signal for the Turkish banking system.
"The Calculation of Weighted Price Elasticity of Tax: Turkey (1998-2013)" (Çankırı Karatekin University Journal, Apr 28, 2015): The tax revenues are one of the most important revenues of the Turkish Economy. Tax revenues are best indicator of the sound economy. The amount of the tax revenues has increased continuously by years and the amount of the tax revenues has reached %24 of the Turkish national product. The forecasts are realized by Ministry of Development ( in Medium-Term Programme and Medium-Term Fiscal Plan) show great deviations from realized tax revenues. It is investigated the historical development and structure of the tax revenues and the results of the public’ tax forecasts are evaluated in detail. This article shows that ARIMA tax forecasts are better than public’ tax forecasts in Turkey.
Teaching & Outreach:
Developed and taught Spanish language courses on Udemy, showcasing my commitment to education and knowledge sharing across different fields.
Authored a book, "Parayı Kim Yaratır?" (Who Creates Money?), offering a fresh perspective on monetary theory and banking.
My Substack Mission: Here, I aim to share insights, deep dives, and discussions on economic theories, blockchain, token economics, monetary policies, and their real-world applications.
#economics #Fed #monetarypolicy #blockchain #usfinancialsystem #repo
