Modeling Transition in Central Asia : The Case of Kazakhstan

This paper presents a small macro-econometric model of Kazakhstan to study the impact of various economic policies. It uses a new approach to test the existence of a level relationship between a dependent variable and a set of regressors, when the characteristics of the regressors’ non-stationarity are not known with certainty. The simulations provide insights into the role of a tight monetary policy, higher foreign direct investment, and rises in nominal wages and in crude oil prices. The results obtained are in line with economic observations and give some support to the policies chosen as priority targets by the Kazakh authorities for the forthcoming years