Open Economy Research Articles

Efficient Coordination of Renewable Energy Resources through Optimal Reversible Pumped Hydro-Storage Integration for Autonomous Microgrid Economic Operation

The paper proposes an energy management system, which considers the efficiency of the reversible pump/turbine that varies nonlinearly depending on the water flow rate during the pump/turbine modes of operation. A vibration avoidance strategy of the reversible pump hydro storage is developed. A probabilistic approach based on artificial neural networks and Naive-based is used. Through minimizing the levelized Cost of Energy (COE), this study shows the optimal size and reconfiguration of the HMG system as well as purchased/sold energy. Two novel modified optimizers based on the Particle Swarm Optimization (PSO) and the Aquila Optimizer (AO), namely: AO initialized PSO and AO updated PSO are developed. The results via the PSO and AO optimizers are compared in terms of reducing the COE and attaining a low execution time. Based on the results, a COE of 0.22 $/kWh through the developed strategy could be obtained with CO2 emissions of 1974 ton/year against 0.24 $/kWh and 2460 ton/year using the PSO, which saves 24.6% of the yearly CO2 emissions. Furthermore, the vibration avoidance strategy avoids the dead zones and enables the reversible pump/turbine machine to operate at higher efficiencies — both of which are impossible to achieve in the occurrence of vibrations.

Economic operation of residential load using IOT-based renewable energy management system

Economic operation of residential load using IOT-based renewable energy management system

Exchange Rate Regime Choices in Small Open Economies from Bretton Woods to Inflation Targeting

AbstractAfter centuries of metallic monies, for a long time, our understanding of fiat money had remained rudimentary and often controversial. Successive regimes eventually failed. The end of the Bretton Woods system marked the moment when the link between fiat money and gold was severed and when the possibility of letting exchange rates float became possible. The small open economies adopted various arrangements. Informed by these experiments, the understanding of monetary policy substantially progressed, leading to the widespread adoption of the expected inflation-targeting strategy with similar inflation targets. As a result, exchange rate variability has declined. The US dollar dominance was maintained and even increased. Yet, new challenges have emerged. The long period of interest rates stuck at the effective bound effectively suspended the use of the strategy. Then, during the post-pandemic surge in inflation rates, inflation forecasts became highly imprecise.

International macroeconomic vulnerability

Small open economies are known to be impacted by shocks to larger economies. This phenomenon is known as macroeconomic vulnerability. We propose and implement a novel index of macroeconomic vulnerability to foreign shocks for a given pair of a large economy and a small open economy. It uses a structural time-varying Bayesian VAR with a block-exogeneity hypothesis. The index is based on the sum of the responses of the small open economy to shocks in the large economy over time, thus allowing us to disentangle and measure the source of the shock, the impact variables, and the duration of impact. We highlight two results out of the many that our index unveils. First, we do not find a difference between the international impact of U.S. shocks during periods of crises versus stability. Second, we find that there is a growing decouple between emerging markets (EM) and developed markets (DM) on how their domestic inflation is affected by U.S. output shocks. Our approach can also be used to elucidate previously unknown transmission channels or unmeasured theoretical mechanisms. Finally, using a sample of developed and developing countries, we find that global banks do not increase the macroeconomic vulnerability of a country.

Secondary Control Strategies in the DC Microgrids

Now, DC microgrids have become more popular for several reasons, including the lack of issues related to reactive power and frequency control, the direct integration of energy storage devices and solar photovoltaic, and the higher utilization of DC loads. A DC microgrid using several sources (distributed generation) is a popular research area. The main issue in such a DC microgrid is to provide good voltage regulation and proportional power sharing among all sources. Control strategy is very important to solve the above issue in order to maintain the reliability and stability of DC microgrids. Hence, a comprehensive review of DC microgrid control techniques is essential. Compared to other methods, hierarchical control is widely used to solve the aforementioned issue. It consists of three layers of control: primary control, secondary control, and tertiary control. At the primary level, to improve current sharing performance, droop control is usually applied. Secondary control is used for voltage regulation of the DC bus. A tertiary control is a higher-level control to achieve Optimization and economical grid operation. In traditional primary control, it is not possible to attain accurate power sharing and voltage regulation simultaneously. Thus, secondary control is required. So, this paper reviews the secondary level control techniques in the hierarchical control strategy for DC microgrids. Precisely, Centralized, distributed, and decentralized approach-based secondary control are reviewed. Several secondary control techniques have been thoroughly examined in terms of their advantages and disadvantages making this an excellent resource for both academics and business executives.

Renovation Wave in Europe: Low-Carbon Design for the Refurbishment of Social Housing in Southern Italy

The public housing stock, called social housing, in Italy was developed between the 1950s and the 1980s. As of today, the first residential developments are almost nearing their end-of-life age and are in need of urgent and intensive renovation. The European Commission, with the Renovation Wave, has set a goal of doubling the rate of building renovation over the next 10 years, reducing emissions, improving energy performance, and promoting decarburization. Renovation interventions, including structural, functional, energy, and plant upgrading interventions, etc., are to be preferred over integral demolition and reconstruction interventions, which have significant repercussions in terms of managerial and social discomfort. The case studies examined concern renovation interventions aimed at energy efficiency, functional adaptation of housing, as well as façade restyling. The design variants analyzed were evaluated in terms of CO2e emissions, according to life cycle inventory (LCI) and Environmental Product Declaration (EPD) approaches. This approach has a twofold purpose: to propose design guidelines, with low CO2e emissions, through hypotheses of variants in the case studies, and to propose, to the economic operators, economically advantageous bidding scenarios in the procurement process.

Research on the impact of pilot free trade zones on urban green development: A case study based on the Yangtze River Economic Belt in China.

Green development is an important component of China's new development concept. Pilot Free Trade Zones (PFTZs), as "experimental fields" for promoting reform, deepening opening-up, and raising the level of an open economy, are important open areas for China to promote green development. However, existing related research is not extensive. This article takes PFTZs as quasi-natural experiments, with the Yangtze River Economic Belt (YREB) as the research area. Based on urban panel data from 2006 to 2020, using multi-period differences-in-differences and spatial differences-in-differences models, it explores the impact effects of PFTZs on urban green development and their potential mechanisms. The research findings indicate: (1) Overall, PFTZs significantly promote urban green development, with variations in impact effects due to different batches and locations of establishment. (2) Mechanism tests show that PFTZs mainly promote urban green development by stimulating technological innovation, industrial upgrading, and reducing government intervention. (3) From the perspective of spatial spillover effects, the establishment of PFTZs not only promotes the green development process in the host cities but also has a promoting effect on the green development of surrounding cities.

Sorting Out the Latest Advances in Separators and Pilot-Scale Microbial Electrochemical Systems for Wastewater Treatment: Concomitant Development, Practical Application, and Future Perspective.

To date, dozens of pilot-scale microbial fuel cell (MFC) devices have been successfully developed worldwide for treating various types of wastewater. The availability and configurations of separators are determining factors for the economic feasibility, efficiency, sustainability, and operability of these devices. Thus, the concomitant advances between the separators and pilot-scale MFC configurations deserve further clarification. The analysis of separator configurations has shown that their evolution proceeds as follows: from ion-selective to ion-non-selective, from nonpermeable to permeable, and from abiotic to biotic. Meanwhile, their cost is decreasing and their availability is increasing. Notably, the novel MFCs configured with biotic separators are superior to those configured with abiotic separators in terms of wastewater treatment efficiency and capital cost. Herein, a highly comprehensive review of pilot-scale MFCs (>100 L) has been conducted, and we conclude that the intensive stack of the liquid cathode configuration is more advantageous when wastewater treatment is the highest priority. The use of permeable biotic separators ensures hydrodynamic continuity within the MFCs and simplifies reactor configuration and operation. In addition, a systemic comparison is conducted between pilot-scale MFC devices and conventional decentralized wastewater treatment processes. MFCs showed comparable cost, higher efficiency, long-term stability, and significant superiority in carbon emission reduction. The development of separators has greatly contributed to the availability and usability of MFCs, which will play an important role in various wastewater treatment scenarios in the future.

The Analysis of Country Insolvency in Sri Lanka

In July 2022, Sri Lanka officially declared national bankruptcy. The bankruptcy seems to result from the outbreak of COVID. In fact, Sri Lanka's economic structure was already very fragile. In March of the same year, the United states opened the most substantial and dense cycle of interest rate hikes since 1981, which quickly led to a global spike in the cost of funds, disrupting the order of global financial markets and directly exacerbating the risk of a debt crisis in Sri Lanka. With the internal and external combined impact, the economic crisis expanded into a food crisis, debt crisis, and went bankruptcy step by step. Nowadays the current global economy is in a recessionary stage. Sri Lanka is the first country to fall, but not the last one. Other emerging market countries are facing the same problem. This paper combs through the process of Sri Lanka's national bankruptcy, deeply analysing the reasons for its bankruptcy and the pulse of its economic operation, and tries to put forward some useful suggestions and insights.

A novel modified artificial rabbit optimization for stochastic energy management of a grid-connected microgrid: A case study in China

The energy management (EM) solution of the microgrids (MGs) is a crucial task to attain most economic, reliable and sustainable operation state of the MGs. This paper aims to solve the optimal scheduling and stochastic EM problem of a smart MG without and with demand side response (DSR) including MT, FC, PV, WT, and a battery storage system (BSS). A study case in Wenzhou city of China is conducted to reduce the operation cost and maximize the utilization of renewable energy. The system uncertainties like loading, temperature, solar irradiance and wind speed are considered which were obtained from real meteorological data. The normal, lognormal, Weibull PDFs as well as Monte-Carlo and RBS methods are used for uncertainty modelling. A modified artificial rabbit optimization (MARO) is proposed for EM solution based on three strategies including fitness-distance balance, exploitation mechanism of PDO and quasi-opposite-based learning (QOBL) to boost exploration and exploitation phases of traditional ARO. The statistical and non-parametric tests are applied via benchmark functions to validate the performance of MARO. As per the obtained results, the MARO is superior for EM solution compared to other techniques and the operation cost is reduced from 252.0721€ct/day to 184.8435€ct/day with saving of 26.86 % considerably with application of DSR.

Technological lock-in developing countries: The role of external financing

Liabilities denominated in foreign currency have established a permanent role in emerging market firms’ balance sheet, which implies that changes in both global liquidity conditions and in the value of the currency may have a long- lasting effect for them. In order to consider the financial conditions that may encourage (discourage) structural change in a small, open economy, we adopt the framework put forward by the “Monetary theory of distribution” (MTD). More specifically, we follow the formulation adopted by Dvoskin and Feldman (2019), whereby the financial system is intended as a basic sector that promotes innovation (Schumpeter, 1911). In accordance to this, financial conditions are binding only for the innovative entrepreneurs, whose methods of production are not dominant and hence they need to borrow from banks to kick- start their production. Through this device, our model offers an explanation to the technological lock-in experienced by a small, open economy which takes international prices as given.

Macro fundamentals and the resurgence of the Feldstein–Horioka puzzle in Europe

This paper discusses the resurgence of the Feldstein–Horioka puzzle after the global financial crisis within the European space. Revisiting the theory of intertemporal choice, this paper suggests that the deterioration of macroeconomic fundamentals that favor capital flows from richer to poorer economies can lead investment and savings to correlate across countries even without frictions to capital mobility. I test this hypothesis against a data set of 12 European economies spanning since the inception of the Maastricht treaty and ending immediately before the start of the Covid-19 pandemic. I find that the investment-savings correlation is generally low both across and within open economies, aligning with the theoretical stylized fact. However, this can be jeopardized when low-income economies accumulate large net stocks of foreign liabilities coupled with sluggish prospects for productivity growth. Ultimately, if investment and savings are not managed in line with macro fundamentals, foreign investors eventually impose a premium on new liabilities, raising the cost of financing investment with foreign funds and leading the correlation between investment and savings to rise both across and within countries.

Study on Master-Slave Game Optimization Operation of Integrated Energy Microgrid Considering PV Output Uncertainty and Shared Energy Storage

Integrated energy microgrids and shared energy storage have significant benefits in improving the energy utilization of the system, which is gradually becoming the current research hotspot. And the uncertainty of new energy output also significantly affects the stable and economic operation of integrated energy microgrid. So how to establish a set of integrated energy microgrids optimization operation model considering photovoltaic (PV) output uncertainty and shared energy storage is an urgent problem to be solved nowadays. Firstly, this paper introduces the framework of an integrated energy system microgrid containing a shared energy storage operator (ESO), and analyzes the scheduling method of the upper tier operator within the system as well as the economic benefits at the lower tier user end. Secondly, to address the randomness of PV output, Monte Carlo method is used to generate the scenarios, and then the scenarios are cut down by using the fast antecedent elimination technique. Then, an optimal operation model is established for micro grid operator (MGO) and user aggregator (UA), respectively, and based on the master-slave game relationship, so that the MGO is the leader and the UA is the follower, a Stackelberg game model is proposed to consider the integrated demand response of electricity and heat between the MGO and UA in the context of the participation of ESO in the auxiliary service of the UA. Finally, the proposed model is brought into a typical residential building community for simulation verification, and the results show that the model proposed in this paper can effectively balance the interests of MGOs and UAs, and realize win-win benefits for UA and ESO.

Optimal operation of flexible interconnected distribution grids based on improved virtual synchronous control techniques

With distributed energy sources connected to the distribution grid on a large scale for distributed photovoltaic power randomness, this paper proposes a flexible interconnection system optimization operation strategy. First, the virtual synchronous control technology is improved to improve the DC bus voltage stability; second, it analyzes the system operation mode to judge the output logic of PV and storage units, takes DC bus power balance as the underlying logic, and puts forward the power coordination optimization strategy and fault power supply restoration strategy with full consideration of factors such as the load balance degree of the distribution station area, the economic operation of the main transformer, and the amount of power lost in the faulty station area. It also establishes a multi-objective optimization model to obtain the power commands of each port and achieves the power flexibility mutualization of the flexible interconnected system through the accurate regulation of the soft normally open point (SNOP). Finally, a simulation model of the flexible interconnection system is built using MATLAB/Simulink to verify the effectiveness of the proposed optimization strategy.

Comprehensive analysis on three-phase imbalance management technology of low-voltage distribution network

Energy production and use is one of the major sources of global greenhouse gas emissions. To combat climate change, many countries and organizations are pushing to reduce the use of fossil fuels, and the use of renewable energy sources such as solar, wind, and hydro is growing rapidly. The conversion of these renewable energy into electricity requires a large amount of power electronics. Power electronics have higher energy conversion efficiency, greater adjustability and control, and smaller size and weight than traditional generators. These characteristics make power electronic equipment have a wide range of application prospects in the field of energy conversion and power control. There may be cost, reliability, debugging, and three-phase imbalance issues. Based on the harm of three-phase imbalance to the economic operation and safe and stable operation of distribution network, the importance of three-phase imbalance in low-voltage distribution network is expounded, and the relationship between three-phase unbalance current and power factor is elaborated on the construction of three-phase imbalance. Reduce the harm of three-phase imbalance to the distribution network and reduce the loss of distribution network lines.

Exchange market pressure in interest rate rules

Many central banks pursue some kind of exchange rate objective. We derive what variables the central bank should look at when setting the interest rate to implement a given objective. Exchange market pressure (EMP), the tendency of the exchange rate to change, emerges as the key variable. This yields a policy rule for the interest rate where EMP is added to, say, a Taylor rule. The coefficient for EMP depends on two structural parameters, namely the effectiveness of the interest rate to ward off depreciation, and the degree of exchange rate management. The rule can implement many regimes, from floating to intermediate to fixed rates. It can be applied to many models, and we illustrate it in a New Keynesian model for a small open economy.

Dictionary-based sentiment analysis of monetary policy communication: on the applicability of lexicons

AbstractIn this study, we discuss central bank communication sentiments assessed using different dictionaries. Policy communication by monetary authorities is considered an essential additional policy tool. Various text-mining techniques could evaluate its sentiment. Dictionary methods are a prominent example here because they offer simplicity and are a starting point for applying more elaborate methods. We decided to test four lexicons: generic, economic and financial and two domain-specific lexicons to conclude on their applicability to assess the sentiments of monetary releases and provide recommendations for their further application. This study surveys four lexicons qualitatively and conducts a few exercises: lexicon content comparison, performance tests for highly positive and negative messages, and statistical tests of dictionary alignment and correlation. The sample covers small open economies implementing inflation targeting. The study concludes that all investigated dictionaries could be used for detecting central bank intentions: they do not return contradictory results. The choice among them for a particular study depends on the study’s setup and goals—as presented in our recommendations

Individual Understanding and Importance of Business Agility in the 21st Century

Objective: In an era of rapid technological development, unpredictable global events and ever-changing customer expectations, new competences have become more valuable for economic operators. Those who can adapt best to change are those who can be flexible, changeable and fast at the same time. These can be collectively referred to as agility and its economic counterpart as business agility. Business agility is not just a buzzword, it is a fundamental change in the way organisations operate and respond to the dynamic challenges of the modern marketplace. The pace of change has accelerated exponentially, driven by technological breakthroughs, market disruptions and unforeseen global events such as the COVID-19 pandemic or international war conflicts. Businesses must adapt to change and have the flexibility to adapt their strategies, products and services accordingly. Moreover, competition is no longer confined to traditional industry boundaries. New players can appear on the market overnight and can pose very significant risks to any business. The ability to adapt, innovate and react quickly to changing circumstances is a core competence that can determine the survival and prosperity of a company. The paper focuses on the understanding and importance of business agility. Method: The paper aims to introduce the subject under study through a secondary research based on a literature review. Following the secondary research, the results of the questionnaire survey will be presented. The questionnaire assessed aspects of agility and agile operations along closed, scaled questions. The results were analysed using descriptive statistics and analysis of variance. Results and conclusion: In this study we wanted to present an individual interpretation of agility. We were interested in the extent to which previous participation in economic and agile education influences the perception of agile criteria. The four cardinal domain statements presented in the survey and the impact of agility on them are not yet adequately assessed by the respondents. Due to the novelty of agility and misconceptions about it, it is not yet possible to clearly demonstrate the positive impact of this approach in Hungary, which is something that needs to change in the future. Research implications: The study can provide a good basis for understanding individual interpretations of agility. The results show that the concept itself is not yet embedded in everyday business thinking, which means that important steps are still to be taken, at least in the case of Hungary. Complex programmes to broaden our understanding would be important and necessary, challenging future education and providing a good basis for further research. Originality/value: The originality of the research lies in the fact that there have been no comprehensive studies and research on agility, on the human side of agile thinking. In this field, the study aims to serve as a thought-provoking tool, establishing the importance of the topic and the need for further research, which is particularly relevant for organisations and individuals in the rapidly changing and challenging world of the 21st century.

Growth and distribution regimes under global value chains: Diversification, integration, and uneven development

This study investigates the macroeconomic interactions between productive structure and income distribution in the context of Global Value Chains (GVC). Our research goes beyond the traditional scope by presenting a detailed typology that examines how globalisation has amplified uneven development processes on a global scale. This in-depth exploration provides valuable insights into the intricate interplay between global economic integration and regional development disparities, thereby contributing to the broader understanding of growth and distribution in the context of globalisation. We propose a theoretical framework inspired by the Structuralist literature to identify three distinct regimes in globalised production chains: (1) a structure/diversification regime based on the Balance of Payments Constrained Model (BPCM) literature, (2) an integration regime derived from the GVC literature, and (3) a functional income distribution regime in open economies. We use Principal Component Analysis (PCA) to create indices (proxies) for each regime to then identify country patterns within a structured typology. We then analyse growth trajectories and estimate the causal relationship between these regimes and per-capita growth using multiple regression models – fixed effects (FE), instrumental variables (IV), and generalised method of moments (GMM). Our dataset includes data from 60 countries between 1995 and 2018, sourced from the World Development Indicators (WDI), World Input-Output Database (WIOD), Trade in Value Added (TiVA), and the Penn World Tables (PWT). This study significantly enhances the understanding of structuralist growth models by offering a comprehensive and unified narrative on the variety of economic growth regimes within Global Value Chains (GVCs).

Uncertainty shocks and monetary policy rules in a small open economy

Abstract Post the great financial crisis (GFC) of 2008–2009, there has been a surge in the macroeconomics literature on aggregate uncertainty. Although the recent literature has recognized the adverse real effects of global uncertainty shocks in emerging market economies (EMEs), the role of monetary policy in offsetting these adverse effects and their link with the exchange rates is not explored in the literature. We find that the currently followed interest rate rules (IRRs) under a flexible inflation-targeting regime are ineffective in stabilizing the domestic economy during periods of high global uncertainty in the EMEs. Using a small open economy new Keynesian DSGE model with Epstein–Zin preferences and second-moment demand shocks, we compare and propose alternate monetary policy rules that significantly reduce welfare losses. We find that the best monetary policy rule in terms of welfare depends on the nature of shock that is, first-moment or second-moment shock.