Unurjargal Nyambuu

The Challenges in the Transition from Fossil Fuel to Renewable Energy

As is currently widely discussed, the implementation of climate stability requires a change in energy technologies. There is active ongoing research undertaken on the future of fossil fuel technology, to produce energy, as well as on alternative technologies, such as renewable energy, to provide energy for the future. Fossil fuel has strong externality effects, extensive CO2 emissions, which are largely responsible for triggering global warming in the long run. Yet, those externalities are not incorporated into the cost and price of fossil fuel when currently supplied. Renewable energy exhibits no externality when produced and is of infinite supply; yet, it can only be harvested with some costs. Many countries have already undertaken projects to phase out fossil fuel and to phase in renewable energy. Our paper studies the cost and price trends of fossil versus renewable energy and the effects of those industries’ performance on stock markets. We sketch a growth model that explains the dynamics of how fossil fuel is phased out and renewables are phased in. Finally, we elaborate on how this can be supported by industrial policies, and discuss what employment effects this transition from fossil fuel to renewable energy may have.

Foreign Exchange Volatility and its Implications for Macroeconomic Stability: An Empirical Study of Developing Economies

This paper studies foreign exchange fluctuations and how they impact both sustainable macroeconomic variables and external debt. Generally, as a “developing” country becomes more globalized through increased international capital flows, both sovereign and private borrowing tends to increase. Debt issued in a foreign currency is affected by the exchange rate as it can raise/decrease borrowing costs. At the same time, instability in the economy and failure to meet debt obligations can be caused by both external and domestic shocks. In this paper, macroeconomic fundamentals, as well as foreign exchange risk and volatility, and credit default are analyzed for both emerging and developing countries. Using a dynamic open economy growth model, excess debt is calculated including the effect of the changes in the value of the currency. The empirical findings of this paper highlight that external credit default risk increases together with greater fluctuations, i.e., volatility, in FX rates, especially in fragile emerging countries, e.g., Brazil, Indonesia, Turkey, and South Africa.

Financing Sustainable Growth Through Energy Exports and Implications for Human Capital Investment

This paper examines the impact of energy resources financing on investment in human capital through the mechanism of growth dynamics. This is done within a context that includes global financial markets and exports of non-renewable energy. These are frequently related to issues of debt accumulation, which naturally raises questions relating to sustainability and welfare—both present and future. Energy export’s contribution to economic growth is emphasized and the distinction between resource-rich and resource-poor countries is highlighted. Major external disturbances for sustained resource-driven development, which can make a country more vulnerable to economic shocks, are discussed. Numerical analysis using Nonlinear Model Predictive Control confirms the empirically observed long-run patterns when non-renewable resources decline monotonically and become depleted. The solutions also confirm typical boom/bust cycle phenomena, where excessive debt may effectively strangle growth. In addition, the implications of investment in human capital for inequality are discussed.

Financial Flows and Productivity in Eastern Europe: Implications for Growth and Policy

The current work highlights empirical evidence regarding a number of macroeconomic indicators and their implications for Eastern European economies and policy. In particular, we are interested in how growth and productivity have impacted the economies on a local scale. We discuss the policy implications with a view toward Eastern Europe’s position as an emerging economic sector as it interacts with world markets and global competition. The chapter focuses on how productivity is impacting employment, but also discusses the methodological and empirical challenges involved in creating more robust models.