The Moderating Role of Per Capita Income in Energy Consumption-Poverty Nexus: Empirical Evidence from Pakistan

Abstract

The moderating role of per capita income pertaining to poverty and energy consumption is a missing link in the literature. To this end, this study aims to explore the energy-poverty nexus in Pakistan, incorporating per capita income as a moderator. Based on the time series nature of the data, we utilize the autoregressive distributed lag (ARDL) technique for the period 1984–2018. We design two separate models, that is, poverty model-A (the primary effect model) and poverty model-B (the interaction effect model). Our findings validate the significant prevalence of the influence of per capita income, as a moderator, on the relationship between energy consumption and poverty in Pakistan. Interestingly, the nature of moderation was observed to be enhancing both in the short and in the long-run. This study provides important policy implications for mitigating poverty in Pakistan. Our empirical findings educate policy makers and academicians to consider moderating behavior of per capita income for robust energy-poverty policy making in Pakistan.