A Small Dynamic Stochastic General Equilibrium Model for Analysis of the Monetary Policy Influence on Inflation and Output Fluctuations in Kazakhstan

Favorable period of 2000-2007 years with a high rates of GDP growth in Kazakhstan after the global economic crisis was replaced by a period of its moderate growth. According to estimates of monetary policy rules the National Bank of Kazakhstan concentrated focus on inflation targeting after the surge to 18.7 percent in 2008 and on stabilizing of the exchange rate. In this report an analysis of the different variants of monetary policy based on a small model of the dynamic stochastic general equilibrium was performed. The results show that the higher exchange rate leads to lower levels of inflation, and the weaker GDP fluctuations in response to shocks of oil prices.