The role of labor market structure and shocks for monetary policy in Kazakhstan
Alisher Tolepbergen ()
International Journal of Economic Policy Studies, 2022, vol. 16, issue 1, No 9, 179-210
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.
Keywords: DSGE; Labor market; Wage rigidity; Bargaining; Bayesian estimation (search for similar items in EconPapers)
JEL-codes: C11 E32 E52 J64 (search for similar items in EconPapers)
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