Michaël Aklin

Renewable energy has the potential to reduce energy poverty in environmentally more friendly ways than fossil fuels. Given these benefits, observers often assume that the deployment of renewable energy should continue unabated, especially as its costs continue to decline. Yet, in practice, the growth of renewables has been uneven and several setbacks continue to plague such growth. The challenges faced by renewables are often political in nature. Given this context, this chapter briefly reviews the role played by renewable energy at the intersection of environmental, energy, and economic policies; clarifies how political, economic, and social factors shape the prospects of renewable energy deployment and how these factors vary within and across industrialized and emerging countries; and investigates the issues faced by renewable energy in the present and the future. These include problems of high costs to consumers, limited ability to raise living standards in developing countries, and struggles faced by the renewable energy industry under high political uncertainty.

Exchange‐rate policies are cornerstones of the world economy. They also have fundamental welfare and distributional consequences on nations, firms, and individuals. How do individuals internalize these consequences? We challenge the conventional wisdom on the source of mass preferences and argue that many individuals understand currency policies through the lens of inflation. Specifically, we argue that people who are concerned about inflation are more likely to support a fixed exchange rate regime and are more likely to oppose depreciation. We present observational and experimental evidence across middle‐income (Argentina and Serbia) and developed (United Kingdom) countries to support our argument. Further tests suggest that fears over purchasing power—instead of debt or savings considerations—drive inflation concerns.

Central bank independence (CBI) solves the time inconsistency problem faced by policymakers with respect to monetary policy. However, it does not solve their underlying incentives to manipulate the economy for political gains. Unable to use monetary policy, and often limited in their ability to use fiscal spending, governments can resort to financial deregulation to generate short‐term political benefits. We show qualitatively and quantitatively that governments systematically weaken financial regulations in the aftermath of CBI, and that the effect of CBI is separate from an ideological shift toward liberalization. Our findings suggest that the growing financialization of the economy experienced by many countries over the last few decades is partly a by‐product of central bank independence.

We examine unequal outcomes in the implementation of India’s national rural electrification program in Uttar Pradesh. We ask two questions: (1) to what extent did Dalits, the lowest group in India’s caste hierarchy, receive less attention when the state electrified rural communities? (2) Was BSP, the state’s Dalit party, able to reduce this inequality? Using data from a hundred thousand villages, we provide robust evidence for unequal outcomes. Villages inhabited solely by Dalits were 20 percentage points less likely to be covered by the program than villages without any Dalits. Moreover, a regression discontinuity analysis shows that the electoral success of BSP failed to reduce such differences. These results highlight the magnitude and persistence of caste inequality in the implementation of democratic public policy, despite political representation.

Climate change mitigation relies increasingly on clean technologies such as renewable energy. Despite widespread success, further deployment of renewables has been met with resistance from voters and governments in several countries. How resilient is the renewable energy industry to adverse political events? I use the unexpected election of Donald Trump in the 2016 U.S. presidential race to study this question. As a vocal critic of renewables and a supporter of fossil fuels, his election is a plausible negative shock to the renewable energy sector. I examine stock market data to gauge the reaction of investors. I find that renewable energy stocks were adversely affected by the election. Overall, they experienced a cumulative abnormal loss in share values of about 6 percent on average over the twenty days that followed the election. However, I find that the negative effect is concentrated among non-U.S. firms. U.S. firms, on average, emerged unscathed. Non-U.S. companies, on the other hand, lost over 14 percent of their value in the aftermath of the election. This suggests that markets are more concerned by increasing obstacles to international business than a decrease of federal support for renewables.