Does Digital Readiness Shield or Expose Economies? Evidence from Natural Gas Shocks and Volatility in the European Union

Jan VoharÄ Ã­k and Bohumil Koutník

Littera Scripta, 2025, vol. 18, issue 2

Abstract: This study analyzes how digital readiness influences economic resilience to natural gas market instability in European Union countries. Using EU panel data from 2017 to 2022, the analysis integrates the Digital Economy and Society Index (DESI), indicators of natural gas price volatility, and macroeconomic outcomes within a two-way fixed-effects framework. Due to data availability, the shock-based analysis (RQ1) covers 27 EU countries, while the volatility-based resilience analysis (RQ2) is conducted for 25 countries. The results show that digital readiness does not uniformly stabilize economic growth. During severe gas market shocks, higher digital readiness is associated with larger short-term GDP contractions, indicating an amplification of shock transmission. In contrast, routine gas price volatility has no significant direct effect on growth. However, when volatility coincides with high energy dependency, digital readiness contributes to greater economic resilience by mitigating adverse growth effects. Robustness tests confirm the stability of these findings, highlighting a non-linear and state-dependent role of digitalization in the energy-growth relationship.

Keywords: Digital readiness; natural gas volatility; economic resilience; energy dependency; European Union (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:rsg:littra:2025-009

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