The role of labor market structure and shocks for monetary policy in Kazakhstan
Tolepbergen A.
February 2022Springer
International Journal of Economic Policy Studies
2022#16Issue 1179 - 210 pp.
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.
Bargaining , Bayesian estimation , DSGE , Labor market , Wage rigidity
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NAC Analytica, Nazarbayev University, Nur-Sultan, Kazakhstan
NAC Analytica
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