Karlygash Kuralbayeva

Unemployment, rural-urban migration and environmental regulation

This paper develops a general equilibrium model that incorporates specific features pertaining to developing countries: a large informal sector and rural-urban migration. A calibrated version of the model is used to study the effects of energy tax changes and a reduction in agricultural-sector energy subsidies on labor market outcomes. The results indicate that the incidence of energy taxes is partly shifted on to the rural sector through rural-urban migration. The results thus highlight the importance of modeling the features particular to developing countries and the economic general equilibrium effects when assessing the impact of environmental taxation in those countries.

Inflation Persistence: Implications for a Design of Monetary Policy in a Small Open Economy Subject to External Shocks

We analyze implications of inflation persistence for business cycle dynamics following terms of trade and risk-premium shocks in a small open economy, under fixed and flexible exchange rate regimes. We show that the countrys adjustment paths are slow and cyclical if there is a significant backward-looking element in the inflation dynamics and the exchange rate is fixed. We also show that such cyclical adjustment paths are moderated if there is a high proportion of forward-looking price setters. In contrast, with an independent monetary policy, flexible exchange rate allows to escape severe cycles, supporting the conventional wisdom about the insulation role of flexible exchange rates.