Exploring the impact of energy consumption on poverty in Pakistan: evidence from the asymmetric ARDL approach.

Abstract

This research work contributes to the literature by examining the role of energy consumption in mitigating poverty via decomposing energy consumption into its positive and negative components, covering the period spanning from 1985 to 2017. To accomplish this objective, this study employs the nonlinear autoregressive distributed lag (NARDL) approach recently popularized by Shin et al., (2014). The NARDL approach iswell-suited to our study becuase of its capability to delineate hidden asymmetries. The empirical findings reveal the prevalence of long-run associations among the studied variables. The outcomes show that an increase (decrease) in energy consumption combats (augments) poverty in Pakistan. The empirical findings underscore that the decreasing effect of energy consumption on poverty is found to be more promising than its increasing effect, both in the long and short run. Based on the empirical outcomes, we suggest that the policymakers, and other stakeholders should consider the asymmetric or nonlinearbehavior of the studied variables for better poverty policy-making in Pakistan.