ABSTRACT

This research presents a comprehensive analysis of the effect of various types of shocks to the macroeconomic outlook of Asian economies. Employing advanced econometric models, the first chapter dissects the multifaceted impacts of oil and natural gas price fluctuations, whereas the exchange rate regimes, and monetary policy decisions on the macroeconomic landscape and renewable energy (RE) sector across diverse Asian countries are explained in subsequent chapters The study further presents a comparative analysis of energy policies across Asia, examining the transition from conventional to renewable energy in response to energy price shocks. It identifies stark contrasts in policy implementation between high-income and low-income countries, with the former emphasizing technological innovation and the latter relying more on international aid. The research highlights Pakistan’s critical need for transitioning to renewable energy due to its reliance on imported conventional energy sources and environmental commitments.

The first essay utilizes a panel Structural Vector Autoregression approach, revealing a nuanced relationship between fuel (oil and LNG) price shocks and RE consumption. It underscores how higher-income nations  are more responsive to  oil  price changes  compared  to  lower-income counterparts and highlights the critical role of government policy in moderating these effects, especially in oil-importing countries.

The second essay delves deeper, using non-linear ARDL and Markov-Regime Switching models to explore the effects of oil prices and exchange rates fluctuations on current account balances. It identifies long-term negative impacts and short-term variabilities, with government interventions playing a key role in mitigating oil price volatilities. This segment of the thesis highlights the necessity for tailored economic strategies that accommodate diverse market conditions, emphasizing the importance of stable exchange rate policies.

In the subsequent chapter, the focus shifts to the effect of monetary policy on asset prices within these regions. Through asymmetric SVAR analysis, significant and varied effects of interest rates on stock and housing prices are identified. The study finds a pronounced impact of monetary policy in developed economies, contrasting with the minimal influence observed in South Asian housing markets due to unique market dynamics and lesser monetary integration.

Hence, this thesis provides valuable insights into the complex dynamics of energy prices, monetary policy, and renewable energy policies in Asian economies. It offers a holistic view of how these elements interact within different economic contexts, providing essential guidance for policymakers in developing effective strategies for economic stability, growth, and sustainable energy transition.