HOW IS KAZAKHSTAN’S STOCK MARKET RESPONDING TO MONETARY AND FISCAL POLICY SIGNALS?
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Date
2024-12-12
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Nazarbayev University Graduate School of Business
Abstract
This thesis investigates the impact of monetary and fiscal policies on stock market performance in Kazakhstan, utilizing a Structural Vector Autoregressive (SVAR) framework. The study focuses on key monetary and fiscal policy instruments, such as the base rate and TONIA, money supply, government expenditures, and their relationship with stock market returns. The results suggest that the spread between the base rate and TONIA significantly influences stock market performance, which indicates that market participants respond to liquidity imbalances. Fiscal policy does not have a significant impact on the stock market, potentially due to the pro-cyclical nature of fiscal policy in Kazakhstan. The study also highlights Kazakhstan’s vulnerability to external oil price shocks. Overall, findings highlight the challenges of weak policy transmission mechanisms in emerging markets and suggest that improving policy coordination, enhancing fiscal discipline, and diversifying the economy are crucial for improving policy transmission to the equity market.
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Keywords
Type of access: Open access, Monetary policy, Fiscal policy, Stock market, SVAR (Structural Vector Autoregression), Monetary and fiscal policy interaction, Emerging market
Citation
Nashirali, A. (2024). How is Kazakhstan's Stock Market Responding to Monetary and Fiscal Policy Signals? Nazarbayev University Graduate School of Business.