Countercyclical fiscal policy boosts economy during oil price shocks in Kazakhstan.
The study looked at how different fiscal rules affect the economy of Kazakhstan during changes in oil prices. They used a model to simulate the impact of fiscal policies on the economy. The results showed that when the government adjusts spending in response to oil price changes, a drop in oil prices leads to a decrease in output. However, if the government follows a different fiscal rule, output actually increases when oil prices drop. This shows that having a countercyclical fiscal policy can help stabilize the economy during times of economic shocks, especially when combined with active inflation control by the central bank.