Energy security and economic stability: The role of inflation and war

Hasanul Banna, Ashraful Alam, Xihui Haviour Chen, Ahmed W. Alam

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)
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This paper investigates the impact of energy security risk (ESR) on economic stability. Using multiple global datasets, we provide empirical evidence from a panel of 68 countries spanning over a period from 1980 to 2021. Our results indicate that high ESR reduces GDP growth rate (GDPG) from a global perspective. In robustness tests, this effect remains valid across several specifications based on non-U.S. samples, national income-level, alternative measure of economic stability, and a set of endogeneity tests based on propensity score matching estimation. Countries with pre-existing low GDPG mainly suffer from heightened energy insecurity. Further tests reveal that numerous country-specific institutional quality estimates moderate the effect. Finally, the damaging impact of ESR worsens during years of high inflation, geopolitical risk and acts, as well as of escalated war threats. We encourage international collaborations to develop a more sustainable energy system, which enhances the security of energy supply and the stability of economy.

Original languageEnglish
Article number106949
JournalEnergy Economics
Early online date14 Aug 2023
Publication statusPublished - Oct 2023


  • Economic stability
  • Energy security
  • GDP growth
  • Inflation
  • Keynesian economic theory
  • War

ASJC Scopus subject areas

  • Energy(all)
  • Economics and Econometrics

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