Political stability in Europe: the effect of energy uncertainty

Muhammad Shahbaz (), Bekhzod Kuziboev (), Sardor Allayarov (), Kamil Pícha () and A. Nazif Çatık ()
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Muhammad Shahbaz: Beijing Institute of Technology
Bekhzod Kuziboev: Urgench State University
Sardor Allayarov: Urgench State University
Kamil Pícha: University of South Bohemia
A. Nazif Çatık: Ege University

Economia Politica: Journal of Analytical and Institutional Economics, 2025, vol. 42, issue 1, No 1, 23 pages

Abstract: Abstract This paper analyses for the first time the impact of energy uncertainty on political stability in Europe over the period 2002–2022, using the Energy-Related Uncertainty Indexes (EUI) developed by Dang et al. (Dang et al., Energy Economics 124, 2023). To this end, Method of Moments of Quantile Regression (MMQR) and Partially linear functional-coefficient panel (PLFC) model are employed to examine linear and non-linear associations. MMQR results reveal that energy uncertainty has a negative effect on political stability across all the quantiles from 10 to 90%. Moreover, the curve of PLFC model estimation also represents that energy uncertainty causes a fall in political stability in Europe. As control variables, economic development, trade openness, and load capacity factor contribute to political stability whereas the refugee population curbs political stability in Europe. As a policy implication, renewable energy transition is helpful to cope with the adverse effect of energy uncertainty on political stability. Furthermore, achieving high economic development is also pivotal especially to invest in renewable energy projects dedicated to reducing the side effects of energy uncertainty on political stability in Europe.

Keywords: Political stability; Energy uncertainty; MMQR; Partially linear functional coefficients (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s40888-025-00362-5

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