Output Volatility Research Articles

배전계통에서 태양광발전의 출력 특성을 고려한 분산전원 수용성 증대 방안 연구

This study presents method to increase the hosting capacity considering output characteristics of photovoltaic (PV) generators in power distribution systems. The analysis of hosting capacity is conducted based on PV generators with large output volatility. The method for increasing hosting capacity is proposed in terms of overvoltage control at PCC voltage, thermal capacity of power distribution line, and interconnecting capacity of PV. The overvoltage of the distribution line according to power output of distributed generation can be controlled by applying a smart inverter with active and reactive power control functions. Currently, the thermal capacity standard of distribution lines follows the maximum normal operating capacity, but it is suggested to change it to the maximum emergency operating capacity. Through case studies, it appears that even if the maximum emergency operating capacity is applied to distribution line, the thermal capacity standard is not exceeded in the case of a smart inverter installed. This study reveals that there is no problem in the operation of the distribution systems even if the interconnection capacity of distributed generation changes from 10 [MVA] to 14 [MVA].

Interlinkages between external debt financing, credit cycles and output fluctuations in emerging market economies

This paper examines the role of external debt financing (EDF) in shaping the credit cycles and the joint implications of EDF flows and credit growth for the output volatility in ten major emerging economies. We find that extreme phases—known as surge and stop episodes—in EDF flows are significantly associated with credit surges and stop episodes as shown by a panel multinominal logit estimation. However, the association is asymmetric—EDF stop episodes are more likely to bring about a credit stop episode compared to the occurrence of credit surges due to EDF surges. The results suggest vulnerabilities of credit cycles of EMEs to the sharp movement in EDF flows which in turn is typically synchronized with global liquidity conditions. In the second part of our analysis, using the bias-corrected LSDV estimation for the dynamic panels, we find that EDF flows and credit jointly have a strong amplifying impact on the output volatility. Moreover, EMEs also face large output volatility when EDF stop and credit stop episodes occur together. The results implicate a broader welfare loss in the form of output fluctuations due to a strong synchronization between external debt financing and domestic credit conditions. Significant output fluctuations are also a cause of concern for policymakers in EMEs who seek to insulate their economies from external and domestic financial shocks.

The Determinants of Fertility and Economic Uncertainty: An Application of the NARDL Model for Hong Kong and South Korea

This article examines the determinants of fertility, using annual data sets from 1980 to 2017 for two major developed economies of the Asian region, namely Hong Kong (China) and South Korea. The article applies the non-linear autoregressive distributed lag model to study the impact of economic uncertainty on fertility decisions in these two countries. Using output volatility measure of economic uncertainty, the study shows that there is an asymmetric impact of economic uncertainty upon fertility decisions. Such an exploration demonstrates the extent of the impact of insecurity in the economy on fertility decisions. Furthermore, the study also explores the impact of infant mortality rate, old-age population, urbanization, income per capita, female employment levels, percentage of women in marriage or union, contraceptive prevalence and human capital formation on fertility decisions in these two advanced economies. The results confirm the asymmetry because the impact of the positive change of uncertainty and the impact of the negative change are not identical. The study concludes that for these major industrialized economies of Asia, economic uncertainty apart from the traditional demographic and economic factors appears to be a crucial factor in impacting fertility decisions.

External debt management as macroprudential policy in a small open economy

This paper examines the role of macroprudential policy and foreign exchange rate intervention in stabilizing the economy facing foreign shocks. To this end, we build a small open economy dynamic stochastic general equilibrium (DSGE) model with a banking sector. We add foreign loans by entrepreneurs regulated by a macroprudential policy via a foreign to domestic loan ratio requirement. The exchange rate intervention is undertaken via a modified Taylor rule. From the analysis, two important results emerge. First, the responses of aggregate output, consumption, investment, and inflation vary widely for different types of foreign shock and policy combinations. Second, the stabilization gain seems to depend on the type of foreign shock hitting the economy. When the economy is hit by a foreign interest rate shock, tightening the macroprudential measure reduces the volatility of output, consumption, and investment-more than if the stabilization effort is carried out through an exchange rate intervention. However, under a risk premium shock, this gain diminishes substantially.

An empirical analysis of output volatility and environmental degradation: A spatial panel data approach

This study examines the effect of environmental degradation on output volatility using spatial panel data models namely spatial lag model (SLM), spatial error model (SEM) and spatial Durbin model (SDM). For a comparative analysis, non-spatial models namely pooled OLS, fixed effects and random effects are also employed. Environmental degradation is proxied through carbon dioxide (CO 2 ) emissions. The analysis is performed for 127 nations covering the period from 1996 to 2014. The findings reveal that environmental degradation increases output volatility in both non-spatial and spatial models. Furthermore, spillover effects of carbon emissions are positive and significant suggesting that national output volatility increases with the increase in adjacent economy’s carbon emissions. Further, the spatial parameters spatial rho and lambda are also positive and significant proving the arguments that output volatility in one specific location spillovers to the nearby neighbor and to the far away trading partner. These findings are robust to the use of methane emissions as an alternative environmental indicator. The findings suggest that to attain sustainable growth, regulatory authorities need to take actions for minimizing environmental degradation not only from its own country but also from the international community to control the environmental stress.

The Link Between Output Growth and Output Growth Volatility: Barbados

This article investigates the effect of output volatility on output growth in Barbados, a small island developing state located in the Caribbean, based on data from 1976 through 2018. I conduct the analysis using the Stochastic Volatility in Mean model with time-varying parameters. The evidence suggests that output growth volatility, measured by stochastic volatility, negatively links with output growth at the aggregate level. I also examine disaggregate output data in order to understand this link better. The sectoral evidence suggests a positive link for services, a negative link for manufacturing, and a weak link for agriculture and the industrial sectors.

Combined Dispatching of Hydropower and Wind Power Based on the Hedging Theory

In order to improve the utilization rate of water resources in the flood season of the reservoir effectively and promote wind power consumption, this paper proposes an optimization model for the combined dispatching of wind power and hydropower based on the hedging theory. First, the conflicting relationship between the water storage benefits of hydropower stations, flood control risks, and the joint output of hydropower and wind power in joint dispatching is studied. The introduction of hedging theory divides the combined dispatching of wind power and hydropower into a two-stage dispatching problem including the decision-making stage and the remaining stage; Second, considering the uncertainty of water forecasting and wind power forecasting, a multi-objective optimal dispatching model of hydropower and wind power based on hedging theory is constructed. This model aims to minimize flood control risks, maximize water storage benefits, and minimize wind power and hydropower combined power output volatility. Finally, the non-dominated sorting genetic algorithm (NSGA2) is used to solve the specific examples. The results show that the model built in the article controls the flood control risk at each time period not to be higher than 1.63 × 10−3 (the flood control standard corresponding to the flood control risk in 50 years is 0.006). Additionally, the water level of the reservoir increased from the flood limit water level (583.00 m) to 583.70 m. It greatly increases the water storage capacity and effectively improves the utilization rate of water resources. At the same time, the optimized scheduling scheme reduced the peak-valley difference of joint output from 125.00 MW to 35.66 MW, and the peak-valley difference was greatly reduced. It effectively improves the volatility of wind power. The validity of the model is verified, and the obtained scheme can provide decision-making for the joint dispatch scheme of hydropower and wind power.

VOLATILITY BY INPUTS AND WEATHER ON SUSTAINABLE APPLE YIELD IN KASHMIR

An Increase in weather risk is generally associated with increases in apple production risk. We consider weather-induced changes in the variation in apple output as a systemic risk in Kashmir. Relative weather and input impacts have been established on regional output volatility. For this reason, we have designed a development component with developing weather variables. Only in some places will rising instability be related to weather shifts. For climate effect analysis, models of only weather variables provide skewed yet fair approximations.

Analysis on the Development Prospect of small and medium-sized pumped Storage Power stations in East China

Small and medium-sized pumped storage power stations have the advantages of short construction period, fast action, relatively low requirements for topography, relatively easy location, relatively low investment, easy layout in load center, flexible operation and fast start-up speed. They can cooperate with the operation of small hydropower, wind power and photovoltaic power to alleviate the grid connection problems caused by the randomness, intermittence and volatility of output. They can improve the landscape absorption capacity of East China Power Grid and promote the development of renewable energy. They can also better meet the needs of regional operation of the power grid, connect to the 110kV or 220kV power grid nearby, save 500kV line corridors and investment, improve the guarantee rate of power supply in local areas, reduce power outages, power limits and power generation can not be delivered and other problems. As an important tool to achieve energy conservation and emission reduction, they can promote the development of low-carbon economy and meet the requirements of energy storage technology and industrial development in China.

Property rights, expropriations, and business cycles in China

Real business cycles in China are different than in many other countries, including consumption being more volatile than output and uncorrelated with investment. To study whether Chinese institutions can account for these features, we augment the standard real business cycle model by private and state-owned enterprises facing time-to-build constraints, expropriations, and government expenditures. We introduce shocks to each of these activities and estimate our model with Bayesian techniques. The model matches the salient data moments quite closely, with expropriations playing a central role. In particular, shocks to expropriations account for over 70% of consumption and output volatility, and over 60% of private investment volatility. To assess whether our estimated expropriations are empirically plausible, we show that: (i) the model-generated expropriation series is positively correlated with a commonly used measure of property rights; (ii) the explanatory power of expropriations drops considerably after 2012, coinciding with the government’s anti-corruption campaign; and (iii) a placebo test estimating the model for the U.S. finds expropriations to be about one eighth of those in China, and to account for only a small share of the U.S. aggregate fluctuations.

Environmental quality and output volatility: the case of South Asian economies.

This study explores the impact of environmental degradation on output volatility for eight South Asian economies over the time span 1971-2017. Environmental degradation is measured by CO2 emissions, nitrous oxide (N2O), methane emissions (CH4), greenhouse gas emissions (GHG), and environmental pollutants index (EPI), whereas output volatility is constructed using a rolling window of five-year moving standard deviation. The results of cross-sectional dependence (CSD) tests indicate the presence of CSD among South Asian economies. For empirical analysis, second-generation panel time series approaches are employed. Also, the findings of panel unit root tests (URTs) signify that the variables are stationary at the first difference and have a long-run relationship. Westerlund cointegration test is used to assess the long-run relationship among the variables. Moreover, this study has used a fully modified ordinary least square (FMOLS) and dynamic modified ordinary least square (DOLS) methods to examine the relationship between environmental degradation and output volatility. In the long run, all indicators of environmental degradation are positive and significant signaling the harmful effects of environmental degradation on output volatility. However, the impact of nitrous oxide is larger relative to other indicators used in the study. The outcome, therefore, suggests that promoting clean investment in nitric acid plants might help improve the environmental quality in the region which in turn fosters the process of economic stability.

The wind-PV-hydro-thermal multi-source cleaning dispatch with the influence of super-power thermal storage boiler

Aiming at the problem of serious waste of clean energy caused by the randomness and volatility of clean energy output during the winter heating period in Northeast China, this paper proposes a dispatching scheme of super-large power regenerative electric boiler, which fully combines the different physical characteristics and respective advantages of power systems and thermal systems. To maximize the economic and environmental benefits of wind-PV-hydro-thermal and other multi-energy joint dispatching, an optimal dispatch model is constructed with the lowest overall power generation cost as the dispatch target considering the power generation operating cost of the thermal power unit, the cost of abandoned light, the cost of abandoned water, the cost of abandoned wind, and the heating income of super-large power storage boilers combined together. The improved PSO algorithm based on multi-agent is used to solve the model. The results of the calculation example show that, after considering the absorption capacity of the super-large power regenerative electric boiler, the operating cost of the system is reduced by about 10%, and under the premise of ensuring the safe and stable operation of the system, the utilization rate of clean energy utilization and the system operation economy is improved.

The impact of inflation targeting: Testing the good luck hypothesis

AbstractStarting in the mid‐1980s, the level and volatility of inflation decreased across industrial countries. The inflation stabilization can be explained by a shift in monetary policy or by a lucky period of low volatility in business cycle shocks. To test the “good luck hypothesis,” we examine the inflation experience of Canada, one of the earliest and most successful adopters of an inflation targeting monetary policy. We Kalman‐filter the historical structural shocks consistent with an estimated dynamic stochastic general equilibrium (DSGE) model of the Canadian economy. The estimated shocks are used to build counterfactual histories. The good luck hypothesis can explain only a minor portion of the change in the path and volatility of inflation after the shift in policy. Most of inflation and output stabilization is accounted by the impact on expectations. Unconditionally, the inflation targeting policy does not improve on the previous policy in terms of inflation volatility, but supports a more favourable trade‐off, reducing substantially output volatility.

Progressive Taxation and Economic Stability*

AbstractRecent empirical evidence finds that progressive taxation is an effective economic stabilizer, but theoretical results disagree. This paper shows that a lifecycle model with total factor productivity shocks can match the empirical evidence. If the US economy switched from progressive to proportional taxation, output volatility would increase by 5 percent. Progressive taxes act as stabilizers by reducing income volatility among the young and soon‐to‐be retirees. Thus, incorporating a rich lifecycle structure in the model is important to match the data. The model is then used to study the welfare implications of reducing tax progressivity.

Economic disasters and aggregate investment.

The 2007–2008 global financial crisis has spurred an increasing interest for investigating the financial and macroeconomic effects of the rare but extremely large economic crises, the so-called economic disasters. Current literature on the topic shows that probability of economic disasters plays an important role in the long-run effect of output volatility on investment. This paper investigates the long-run relationship between economic disasters and aggregate investment. We analyze the data for a large number of developing and developed countries after the World War II. The conducted panel data analysis indicates a negative effect of the probability of economic disasters on aggregate investment. Our results contribute to the recent literature on economic disasters by providing empirical support for the hypothesis that probability of infrequent but extremely large economic crises has a negative long-run effect on investment. We also find that the effect of ‘normal’ output volatility on aggregate investment is relatively small.

Endogenous discounting, investment and asset pricing

AbstractWe extend an equilibrium business cycle/asset pricing model of production and capital accumulation by introducing wealth‐dependent time preferences. First, we find that the aggregate consumption is no longer proportional to the output and the consumption volatility is always lower than the volatility of output. Second, the expected real growth rate is increasing in the capital stock, which leads to a twin‐peak shape of the world wealth distribution as shown in the data. With respect to financial markets, we show that the equity risk premium is reduced by the endogenous discounting and exhibits a cyclical pattern, which depends on the capital stock. Finally, time‐varying discount rate leads to welfare improvement and the welfare gain is decreasing in the capital stock.

Output volatility and efficiency gains: evidence from Latin American gross value added

ABSTRACT Based on gross value added (GVA) shares of economic activities from 1990 to 2014, the paper shows that convex growth-instability frontiers exist for 19 Latin American countries. Numerical simulations show that in 2011, Latin America's industry portfolios were below Markowitz's efficiency frontier, and that rearranging the shares of economic activities contributes to efficiency gains that are negatively linked to industrial diversification. Reducing output volatility, MERCOSUR countries with a low degree of industrial diversification would average relatively high efficiency gains, while the reverse is true for CACAM and CAN countries. Analyzing more recent industry portfolios, Latin American countries closed the efficiency frontier gap and captured efficiency gains in terms of lower output volatility and higher GVA growth rates. Convex growth-instability frontiers are confirmed by stochastic frontier analysis, which identifies variations in employment ratios and industrial diversification as the key sources of inefficiency.

Monetary Policy Rules and the Effective Lower Bound in the Euro Area

We analyze the economic performance of different monetary policy strategies, or rules, in a low interest rate environment, using simulations with a DSGE model which has been estimated for the euro area. We study how often the effective lower bound of interest rates (ELB) is likely to bind, and how much forgone monetary policy accommodation this entails. Macroeconomic outcomes are measured by the mean levels and the volatility of output (gaps), unemployment and inflation. We present three sets of results. First, the macroeconomic costs of the ELB are likely to grow in a non-linear manner if the monetary policy space (the difference between the normal, or average, level of nominal interest rates and the ELB) shrinks. Second, a point inflation target appears to outperform a target range. Third, the (relative) performance of low-for-long (L4L) monetary policy rules depends on the size of the monetary policy space. The L4L rules tend to perform well, if the monetary space is small, but if the space is larger these rules, while stabilizing inflation, may lead to more volatility in the real economy than flexible inflation targeting.

Power-to-gas-based VPP Stochastic Scheduling Optimization Model in View of Carbon Emission Constraints

Combining P2G and virtual power plant (Virtual power plant, VPP), this paper proposes a new concept of electrical interconnection virtual power plant (Power-to-gas-based VPP, GVPP). In addition, this paper proposes a GVPP low-carbon economic dispatch optimization model considering carbon emission rights trading. Furthermore, in view of the strong uncertainty of wind power and PV power generation in GVPP, the information gap decision theory is used to measure the uncertainty tolerance threshold of decision makers under different expected target deviations. In addition, a GVPP near-zero carbon random scheduling optimization model is established under the conventional and worst-case scenarios. In order to verify the feasibility and effectiveness of the proposed model, a 9-node energy hub was selected as the simulation system. The results show that: (1) GVPP can coordinate and optimize the output of electricity-to-gas and gas turbines according to the difference in gas and electricity prices in the electricity market and the natural gas market at different times. Moreover, it can use the two-way conversion of gas and electricity energy to form an electricity-gas-electricity cycle, thereby improving the system’s clean energy absorption capacity, reducing its own carbon emissions and the volatility of net output. (2) The IGDT method can be used to describe the impact of wind and wind uncertainty in GVPP. Decision makers can obtain the maximum tolerance for wind and wind uncertainty by setting a reasonable expected target deviation coefficient. For example, when the expected target deviation coefficient is 0.5, the corresponding degree of uncertainty is 0.142. In the worst scenario, the scheduling results obtained by this method are in line with the actual scheduling experience, which reflects the effectiveness of the method in this paper. In summary, the models and methods presented in this paper can be used to formulate optimal scheduling decision-making schemes for GVPP considering carbon trading and uncertainty.

Rationally Inattentive Monetary Policy

This paper studies optimal monetary policy under rational inattention: the policy maker optimally chooses her information subject to a processing constraint. Our analytical results emphasize how the policy maker’s information choices shape her expectations and the dynamics of the macroeconomy. Paying attention to demand shocks lowers output volatility and causes untracked supply shocks to drive inflation. Because persistent supply shocks have a minor impact on interest rates under full information in the New Keynesian model, the policy maker should focus her limited attention on demand shocks. Improvements in information can explain a declining slope of the empirical Phillips curve.