Determining the relationship between energy consumption and economic growth in Pakistan


Farhan Ali, Khawar Ahmed Khan, Ali Raza

Energy is substantial for economic development. This study aims to unveil the causal relationship and long-term association between economic growth and energy consumption in Pakistan. The Granger-Causality test finds that; natural gas consumption, electricity consumption and coal consumption have uni-directional causal relationship with economic growth as (GC, EC and CC→GDP), however, GDP growth rate, natural gas consumption and coal consumption unilaterally Granger causes Inflation (GDP, GC and CC→CPI) and lastly coal consumption→natural gas consumption (GC), Electricity consumption (EC)→GC. The ARDL estimations delineate natural gas consumption and oil consumption having a positive and negative association with GDP growth rate may have significant long term impacts respectively on the the economic growth of Pakistan.
Key words: Oil consumption; Natural gas consumption; Coal consumption; Electricity consumption; CPI; ARDL and Granger-causality test
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