Challenges and opportunities of green economic policy: An empirical analysis of Mongolia’s economic growth

Abstract

The primary objective of this study is to empirically examine the impact of key green economy indicators on Mongolia’s economic growth (GDP) over the period 1990–2024. The analysis employs variables such as value added in agriculture (VAA), consumption of renewable energy (CRE), carbon dioxide emissions (CDE), and per capita freshwater resources (PCW), using data processed through STATA 19 software. At the initial stage, the Ordinary Least Squares (OLS) regression results reveal that VAA exerts a statistically significant and positive influence on economic growth, whereas CRE demonstrates a positive effect at the marginal level of significance. Conversely, CDE and PCW show no discernible impact on GDP. In the subsequent stage, the Autoregressive Distributed Lag (ARDL) model is applied to explore the dynamic relationships among GDP, VAA, and CRE. The findings indicate that the previous year’s increase in VAA is negatively associated with current economic growth, implying a reversion effect. Moreover, short-term growth in CRE appears to have a contractionary effect on GDP, potentially due to transition costs and structural adjustments associated with renewable energy adoption. Overall, the empirical evidence suggests that while green economic policies are essential for promoting sustainable economic growth in Mongolia, targeted measures are needed to mitigate short-term transition costs and to stabilize agricultural output fluctuations during the transformation process.