Unveiling the nexus between energy import dependency and macroeconomic instability: Panel evidence from emerging market economies

Anjan Kumar Sahu and Mantu Kumar Mahalik

The Journal of International Trade & Economic Development, 2026, vol. 35, issue 2, 435-454

Abstract: Although considerable research has examined the causal rapport between crude oil prices and macroeconomic performance, the interplay between energy import dependence and macroeconomic fluctuations remains unexplored. By employing the pooled mean group autoregressive lag (PMG-ARDL) model, this study is motivated to examine the interplay between energy import dependency and macroeconomic instability in 12 net energy-importing emerging nations from 1996-2019. This study also includes governance quality, bank credit and government spending as important control variables in macroeconomic instability function. The study’s findings demonstrate that reliance on overseas energy hampers macroeconomic resilience. This study further found the positive impact of governance quality and government spending on macroeconomic stability while bank credit adversely influences it. These results were also verified by using the feasible generalized least square (FGLS) method. In terms of policies, this study suggests that increasing energy import dependency should be gradually minimized to enhance emerging economies’ macroeconomic resilience. However, raising energy import tariffs and building energy self-sufficiency could be the key to reducing energy import dependency. This study further suggests that policymakers should consider governance quality and government spending as important determinants of macroeconomic stability. Besides, monetary policy needs to understand bank credit’s adverse impact on macroeconomic stability.

Date: 2026
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DOI: 10.1080/09638199.2024.2443401

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