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

Alisher Tolepbergen ()

No 10, NAC Analytica Working Paper from NAC Analytica, 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. First, we examine to what extent more flexible labor market affects the transmission of monetary policy in the calibrated version of the model. The results show that more flexible wage-setting process improves the transmission mechanism. A monetary policy shock translates faster to inflation. Further, we find that the relevance of other features of labor market for the transmission of monetary policy shocks is limited. Second, 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 output and inflation fluctuations and thus should be closely monitored by the central bank.

Keywords: DSGE; labor market; wage rigidity; Bayesian estimation (search for similar items in EconPapers)
JEL-codes: C11 E32 E52 J64 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2020-12, Revised 2021-01
New Economics Papers: this item is included in nep-cba, nep-cis, nep-dge, nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The role of labor market structure and shocks for monetary policy in Kazakhstan (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ajx:wpaper:10

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