Monetary Policy Effectiveness in Kazakhstan: Results With a Small Macro Model

IMF Working Papers, August 29, 2025

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Canonical URL: Monetary Policy Effectiveness in Kazakhstan: Results With a Small Macro Model

Author: Gregorio Impavido
Date: August 29, 2025
Publication: IMF Working Papers
Key statement: Monetary policy effectiveness has increased over time.
Abstract summary: This paper assesses the effectiveness of monetary policy in Kazakhstan using a small macro model and identifies alternative plausible economic structures consistent with priors on the sign of responses of macro variables to structural shocks.

Model type:
- Small macro model
- Structural vector autoregression (SVARs)
Identification approach:
- Uses priors on the sign of responses of macro variables to structural shocks
- Employs sign restriction / sign restrictions and parametric restrictions where applicable
Key variables analyzed:
- Central bank policy rate
- Inflation
- Output gap
- Prices
- Production
- Financial services

Monetary policy effectiveness has increased over time.
The analysis identifies alternative plausible economic structures that are consistent with priors on the sign of responses of macro variables to structural shocks.
The study uses summary statistics and SVARs to evaluate responses of:
- Central bank policy rate
- Inflation
- Output gap
- Prices
- Production

Strengthened monetary policy transmission in Kazakhstan over time implies:
- Greater potential effectiveness of central bank policy rate adjustments for influencing inflation and output gap.
- Relevance of ongoing monitoring of transmission channels including prices, production, and financial services.
Use of sign-restriction SVARs and small macro models can help central banks evaluate robustness of monetary policy effects under alternative plausible economic structures.