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The role of labor market structure and shocks for monetary policy in Kazakhstan

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  • Alisher Tolepbergen

    (Nazarbayev University)

Abstract

In this paper , we study the role of labor market structure and shocks for monetary policy in Kazakhstan employing a New Keynesian model with labor market rigidities. We estimate the model using Bayesian techniques to identify labor market shocks that are important for monetary policy-making. The estimation results suggest that shocks to the bargaining power of workers explain most of the output and inflation fluctuations. Thus, it should be closely monitored by the central bank. In addition, we examine to what extent different labor market characteristics affect the transmission of monetary policy. The results show that a more flexible wage-setting process improves the transmission mechanism. A monetary policy shock translates faster to inflation. Furthermore, we find that the relevance of other features of the labor market for the transmission of monetary policy shocks is limited.

Suggested Citation

  • Alisher Tolepbergen, 2022. "The role of labor market structure and shocks for monetary policy in Kazakhstan," International Journal of Economic Policy Studies, Springer, vol. 16(1), pages 179-210, February.
    • Handle: RePEc:spr:ijoeps:v:16:y:2022:i:1:d:10.1007_s42495-021-00073-2
    DOI: 10.1007/s42495-021-00073-2
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    1. repec:ire:issued:v:26:n:03:2023:p:420-462 is not listed on IDEAS
    2. Адилханова Зарина // Adilkhanova Zarina, 2024. "Влияние жесткости заработных плат на инфляцию в рамках трансмиссионного механизма монетарной политики // The impact of wage rigidity on inflation within the framework of the transmission mechanism of ," Working Papers #2024-5, National Bank of Kazakhstan.
    3. Alisher Tolepbergen, 2021. "Minimum Wage Shocks in an Estimated DSGE Model with Underreporting," NAC Analytica Working Paper 20, NAC Analytica, Nazarbayev University, revised Dec 2021.
    4. Akbobek Akhmedyarova, 2023. "Housing Market Dynamics in Kazakhstan: An Estimated DSGE Model," International Real Estate Review, Global Social Science Institute, vol. 26(3), pages 422-464.

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    More about this item

    Keywords

    DSGE; Labor market; Wage rigidity; Bargaining; Bayesian estimation;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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