Determining the relationship between energy consumption and economic growth in Pakistan

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.