How do energy price shocks affect global economic stability? Reflection on geopolitical conflicts

Jun Zhao, Bo Wang, Kangyin Dong (), Muhammad Shahbaz and Guohua Ni

Energy Economics, 2023, vol. 126, issue C

Abstract: The sharp rise of energy prices after the Russia-Ukraine conflict have restricted social activities and economic evolution in the area, and further brought the underlying macroeconomic effects of energy price fluctuations into public view. To examine whether and how the global energy price volatility affects the stable operation of the national economy, we perform econometric analysis on global 69 economies from 2003 to 2019. The regression outcomes insist that: (1) the price volatility of three kinds of energy has a substantial restraint impact on economic growth behaviors, among which the natural gas price has the most prominent effect; (2) the impacts of frequent energy prices shocks on economic stability significantly vary among different economic organizations, which are more pronounced for the sub-samples of non-B&RI, OECD, and RCEP countries; (3) the fluctuation of three energy prices is a vital factor affecting economic growth at any quantile level, and its impact on economic growth is most prominent in the high quantile range; and (4) industrial upgrading plays an intermediary role in the energy price-economic stability nexus; in other words, industrial upgrading is regarded as a plausible channel that links energy prices with economic stability. Hence, some policy implications on adjusting energy price mechanism and strengthen economic stability are provided.

Keywords: Energy shocks; Economic stability; Russo-Ukrainian war; Heterogeneous analysis; Mechanism analysis (search for similar items in EconPapers)
JEL-codes: C23 Q43 Q55 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:126:y:2023:i:c:s0140988323005121

DOI: 10.1016/j.eneco.2023.107014

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