Abstract
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.
Highlights
Economic growth is energy-Intensive phenomenon (Xavier and Baltasar, 2012)
This study empirically aims to determine,The causal relationship between economic growth and oil consumption, natural gas consumption, coal consumption and electricity consumption
By reviewing the existing literature this current study investigates the causal relationship between Economic Growth and different types of Energy Consumption in Pakistan and Inflation as consumption in the presence of Inflation (CPI) as an intermittent variables
Summary
The World Bank (2012) pointed out an energy indicator (GDP at US$/total oil equivalent) as a development stage of a country. Pakistan’s average economic growth (2.9%) remained at bottom during (2009-2013) in comparison to its geographic neighbouring South-Asian countries (India’s 6.7%, Bangladesh’s 6.2% and Sri Lanka’s 6.5%). Energy imbalances (demand-supply gap), internal security matters and natural disasters are among the primary indicators behind the poor economic performance in Pakistan’s economy (GOP, 2013) (Figure 1). This study empirically aims to determine,The causal relationship between economic growth and oil consumption, natural gas consumption, coal consumption and electricity consumption. The shortterm relationship between economic growth and oil consumption, natural gas consumption, coal consumption and electricity consumption. The long-term relationship among economic growth and oil consumption, natural gas consumption, coal consumption and electricity consumption in the presence of Inflation (CPI) as intermittent variable
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