Top PDF A causal relationship between energy consumption and economic growth in Nepal

A causal relationship between energy consumption and economic growth in Nepal

A causal relationship between energy consumption and economic growth in Nepal

In the present paper, an attempt is made to examine the causal relationship between the per capita consumption of coal, electricity, oil and total commercial energy and the per capita real gross domestic product (GDP), using a co-integration and vector error correction model. The increase in real GDP, among other things, indicates a higher demand for a large quantity of commercial energy such as coal, oil and electricity. This implies that low infrastructure development limits the usage of commercial energy, which may also hold back economic growth. Empirical findings reveal that there is a unidirectional causality running from coal, oil and commercial energy consumption to per capita real GDP, whereas a unidirectional causality running from per capita real GDP to per capita electricity consumption is found. It is suggested that the input of per capita energy consumption stimulates enhanced economic growth in Nepal.
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The Granger causal relationship between energy consumption and economic growth for eight European countries

The Granger causal relationship between energy consumption and economic growth for eight European countries

This finding suggests a decoupling between energy consumption and economic activity providing support to the argument that after 1970, the relationship between the two variables could have changed. The hypothesis seems to be stronger for most countries while for the cases of Spain and Portugal a coupling between the two variables could still hold even after 1970s given that the two variables continue to rise simultaneously. In fact, in Figure 3 the energy intensities (the ratio of energy consumption to GDP) of all countries after 1970 are presented and it can clearly be seen that while for the majority of them energy intensity declines, suggesting a decoupling between the two variables in the long run, for Spain and more clearly for Portugal the ratio remains relatively stable at the same levels, after 1970. This could be attributed to the relatively latter industrialization that the countries had compared to the more developed economies in northern Europe. In fact, the study by Henriques (2011) on the Portuguese economy has shown that two key outcomes of the later industrialization of the country could be the main reasons for the existing coupled relationship of energy consumption and economic growth after 1970. The first is related with the “subsectoral structural change” that occurred in the country which was relatively different than that of more advanced economies in Europe favoring the immergence of energy intensive industries like chemicals and pulp. However the second and more “concerning” factor, has been the fact the country’s industry after the 1970s was focused more on a low value added production structure. In this sense, “in an time where knowledge was the important factor of production, producing low value- added products could … compromise the decoupling of energy from economic growth” (Henriques, 2011: 256).
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Examining the relationship between electricity consumption and economic growth in Uganda

Examining the relationship between electricity consumption and economic growth in Uganda

This study examined the causal relationship between electricity consumption and economic growth in Uganda during the period 1960–2014. Inasmuch as there have been similar studies done on the African continent on this relationship, none has been done in Uganda. The objectives of the study were threefold: 1) to estimate the short--run and long--run relationship between electricity consumption and economic growth in Uganda; 2) to examine the direction of the causal relationship; and 3) to propose policies to guide future decision making of government. To achieve these objectives, the study adopted the Auto Regressive Distributed Lag bounds approach in analysing the level of relationship. In addition, the study used the pairwise Granger Causality testing procedures to determine the direction of causation between the study variables. Results from the study indicated that there is a valid long-run level relationship between electricity consumption and economic growth. In addition, the pairwise Granger causality tests indicated that the relationship is unidirectional, running from electricity consumption to economic growth. Overall, the study found that energy consumption spurs economic growth in Uganda. The government should fast-track and consolidate interventions in electricity generation with the view of sustaining the long-run electricity demand and consumption in Uganda. In the short run, investments to improve energy efficiency and reduce losses should make more electricity available for consumption.
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The relationship between energy consumption, financial development and economic growth: an evidence from Malaysia based on ARDL

The relationship between energy consumption, financial development and economic growth: an evidence from Malaysia based on ARDL

This study aims to examine the short-run and long-run relationship between economic growth, energy consumption, financial development, capital formation and population by using data set of Malaysia for the period 1971–2014. An emerging economy like Malaysia has high energy consumption which is intensified by its growing population. Economic growth and energy consumption in Malaysia have been rising over the past several years. The motivation to this study is related to four policy objectives of Malaysia; economic growth, financial development, energy conservation and reduction on pollution. The auto regressive distributed lag (ARDL) bounds testing approach to test the long run relationship among the variables, while short run dynamics were investigated using the Vector Error Correction Model (VECM). Variance decomposition (VDC) technique was used to provide Granger causal relationship between the variables.The findings suggest that energy consumption is influenced by economic growth and financial development, both in the short and the long run. The population–energy relationship however only holds in the long run. The results have important policy implications for balancing economic growth vis-à-vis energy consumption for Malaysia, and other emerging nations to explore new and alternative sources of energy to meet the rising demand of energy to sustain economic growth.
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The Long Run Relationship between Transport Energy Consumption and Transport Infrastructure on Economic Growth in MENA Countries

The Long Run Relationship between Transport Energy Consumption and Transport Infrastructure on Economic Growth in MENA Countries

The impact of transport and communication infrastructure on economic growth is a topic that has attracted considerable attention from researchers, academicians and practitioners in the existing economic literature (Zhou et al. 2002, Esfahani and Ramirez 2003, Pradhan and Bagchi 2013, Kim et al. 2017, Jin and Rafferty 2017). For example, Fernald (1999) affirmed that there is a strong link between investment in transport infrastructure and economic productivity. With data for 29 US industries, the empirical evidence shows that the decline in productivity registered in the United States after 1973 was more important in high-intensity vehicle industries. The results also confirm that these industries benefited disproportionately from investments in road networks. In OECD countries, Roller and Waverman (2001) tested the impact of telecommunications infrastructure on economic growth by applying a micromodel for telecommunication investment with a macro-production function. Their empirical analysis confirmed the presence of a positive causal relationship between telecommunication infrastructure and economic development, i.e., a feedback effect. For countries in Latin America (Guatemala, Honduras, Nicaragua), Escribano and Guasch (2005) indicated that access to the internet increases the productivity of workers from 11% to 15%. Yeaple and Golub (2007) examined the impact of three types of infrastructure (roads, telecommunications, and electricity) on total factor productivity for 18 countries and 10 manufacturing industries over the period of 1979-1997 period. They apply the three-stage least squares (3SLS) estimation strategy and show that roads have the most important impact on productivity in different industries. These results help explain patterns of comparative advantage and international specialization. In addition, Mu and Van de Wall (2007) showed that the extension of rural road networks in Vietnam increases job opportunities by 11% for unskilled workers.
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The Relationship Between Energy Consumption and Economic Growth: Evidence From Azerbaijan

The Relationship Between Energy Consumption and Economic Growth: Evidence From Azerbaijan

The final step in this study is to verify the direction of causality between energy consumption (Enuse_ pc) and economic growth (GDP_pc) using the Toda and Yamamoto causality test. The empirical results of Granger Causality test based on methodology is estimated through MWALD test and reported in Table 7. According to Toda Yamamota causality test “Enuse_pc does not Granger Cause GDP_pc” null hypothesis rejected and also “GDP_pc does not Granger Cause Enuse_pc” null hypothesis rejected. Consequently, there is observed bi-directional causality between energy consumption and economic growth. Our finding of bidirectional causality is the same with the findings of Apergis and Payne (2009) and Senturk and Sataf (2015) and differs that of Bildirici and Kayıkçı (2012) and Tang and Abosedra (2014), who found unidirectional causality running from energy consumption to economic growth and differs Kalyoncu et al. (2013) result of no causal relationship and also, that of Hasanov et al. (2017) finding with causality running from gdp to energy consumption.This may be because of using different methods and periods.
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Energy consumption and economic growth in Ethiopia: A dynamic causal linkage

Energy consumption and economic growth in Ethiopia: A dynamic causal linkage

This study has explored the causal relationship between energy consumption and economic growth – using the time-series data from Ethiopia during the period from 1971 to 2013. The study is fundamentally different from the majority of previous studies on energy-growth causality nexus in that it has used a multivariate framework – with financial development, investment and trade openness as the intermittent variables. The study has also utilised the ARDL bounds testing approach to co-integration and the ECM-based Granger-causality tests to examine this linkage. The results of this study show that in Ethiopia, there is a distinct unidirectional causal flow from economic growth to energy consumption. These results apply, irrespective of whether the estimation is done in the short run or in the long run. The study, therefore, recommends that in Ethiopia, policy makers should consider expanding their energy-mix options, in order to cope with the future demand arising from increased economic growth.
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Causality between Energy Consumption and Economic Growth in Pakistan

Causality between Energy Consumption and Economic Growth in Pakistan

In this paper we attempted to find the direction of the causal relationship between energy consumption and economic activity in Pakistan. More specifically we investigated the causal relationship between growth in energy consumption and growth in GDP while causality between other variables also. The methodology was based on the Granger causality test which has been found appropriate by using the unit root test and finding out that only GDP growth is stationary at level while all the other three variables are non stationary at level and can be made stationary at first level. The estimated results infer that all variables are not granger causing each other at 5 percent level of significance while at 10 percent level of significance electric power consumption is granger causing GDP growth. The paper has important policy implications. Since Pakistan pays high oil import bill, petroleum imports were $1.53 billion in 1999/00 and in the preceding year $1.57 billion. In 2000-01 petroleum imports may be close to $2.5 billion or around 25 percent of total imports (Dawn 18-23 April 2000). Therefore, using oil more efficiently and substituting gas for oil wherever possible could be a good policy measure. The implications of the present study suggest that an energy conservation policy regarding petroleum consumption would not lead to any adverse side-effects on economic growth in Pakistan, whereas energy growth policy in the case of gas and electricity consumption should be adopted in such a way that, growth in these sectors stimulates economic growth.
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Energy Consumption, Economic Growth Relationship and Causal Independence: Evidence from Panel Data Forselected Low Income Countries

Energy Consumption, Economic Growth Relationship and Causal Independence: Evidence from Panel Data Forselected Low Income Countries

We use annual energy consumption, EC hereafter and GDP per capita data in this study. EC is kg of oil equivalent and GDP data with (LCU) constant. The data are sourced from World Development Indicators (2012). These countries are first on the platform of low income countries and from among them, four African countries are chosen which include Nigeria, Benin, Kenya and Ghana and four non-African (Asian) countries which include Bangladesh, Pakistan, India and Nepal. A Period of 1975- 2010 was considered for the purpose of this study. All variables are employed with their natural logarithms form to reduce or forestall heteroscedasticity. To investigate the relationship and causality issue, panel unit root analysis, panel cointegration analysis, panel causality analysis, panel fully modified ordinary least square (FMOLS) and panel dynamic ordinary least square (DOL) estimates are employed in this study.
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Energy Consumption and Economic Growth: New Insights into the Cointegration Relationship

Energy Consumption and Economic Growth: New Insights into the Cointegration Relationship

The question of whether or not energy conservation policies affect economic activity is of great interest in the international debate on global warming and the reduction of greenhouse gas emis- sions. Although the causal relationship between energy consumption and economic growth has been widely studied, no consensus regarding this so-called energy consumption-growth nexus has yet been reached. The direction of causality is highly relevant for policy makers. For instance, if causality runs from energy consumption to economic growth, energy conservation policies that have the aim of reducing energy consumption may have a negative impact on an economy’s growth. The liter- ature proposes four different hypotheses regarding the possible outcomes of causality Apergis and Payne (2009a,b). 1 The growth hypothesis suggests that energy consumption is a crucial component in growth, directly or indirectly as a complement to capital and labour as input factors of production. Hence, a decrease in energy consumption causes a decrease in real GDP. In this case, the economy is called ‘energy dependent’ and energy conservation policies may be implemented with adverse e ff ects on real GDP. By contrast, the conservation hypothesis claims that policies directed towards lower en- ergy consumption may have little or no adverse impact on real GDP. This hypothesis is based on a uni-directional causal relationship running from real GDP to energy consumption. Bi-directional causality corresponds with the feedback hypothesis, which argues that energy consumption and real GDP affect each other simultaneously. In this case, policy makers should take into account the feed- back e ff ect of real GDP on energy consumption by implementing regulations to reduce energy use. Additionally, economic growth should be decoupled from energy consumption to avoid a negative impact on economic development resulting from a reduction of energy use. A shift from less effi- cient energy sources to more e ffi cient and less polluting options may establish a stimulus rather than an obstacle to economic growth (Costantini and Martini, 2010). Finally, the neutrality hypothesis indicates that reducing energy consumption does not affect economic growth or vice versa. Hence, energy conservation policies would not have any impact on real GDP.
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Energy Consumption and Economic Growth – New Insights into the Cointegration Relationship

Energy Consumption and Economic Growth – New Insights into the Cointegration Relationship

nent in growth, directly or indirectly as a complement to capital and labour as input factors of production. Hence, a decrease in energy consumption causes a decrease in real GDP. In this case, the economy is called ‘energy dependent’ and energy conservation policies may be implemented with adverse e ff ects on real GDP. By contrast, the conservation hypothesis claims that policies directed towards lower energy consumption may have little or no ad- verse impact on real GDP. This hypothesis is based on a uni-directional causal relationship running from real GDP to energy consumption. Bi-directional causality corresponds with the feedback hypothesis, which argues that energy consumption and real GDP a ff ect each other simultaneously. In this case, policy makers should take into account the feedback e ff ect of real GDP on energy consumption by implementing regulations to reduce energy use. Additionally, economic growth should be decoupled from energy consumption to avoid a negative impact on economic development resulting from a reduction of energy use. A shift from less e ffi cient energy sources to more e ffi cient and less polluting options may establish a stimulus rather than an obstacle to economic growth (Costantini and Mar- tini, 2010). Finally, the neutrality hypothesis indicates that reducing energy consumption does not a ff ect economic growth or vice versa. Hence, energy conservation policies would not have any impact on real GDP.
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What is the relationship between energy consumption in a country and its economic growth?

What is the relationship between energy consumption in a country and its economic growth?

Energy can be divided into two categories: renewable energy and non-renewable energy. The need to reduce greenhouse gas in the environment can lead to an increase in renewable energy, in order to let the use of fossil energy decline. Another issue is that to maintain sustainable growth, the need for so-called ‘green’ energy is higher than for lower growth countries (Maji & Sulaiman, 2019). Decoupling energy consumption from economic growth is necessary to increase energy efficiency (Moreau & Vuille, 2018). By doing so, the relationship of energy use on growth needs to attenuate. Decreasing energy consumption is one part of the necessary plan to reduce emissions and reducing our impact on climate change (Friedlander, 2009). However, Shahbaz et al. (2017) conclude from previous research that one causal relationship between economic growth and energy consumption has not been defined.
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Analyzing Long-run Relationship between Energy Consumption and Economic Growth in the Kingdom of Bahrain

Analyzing Long-run Relationship between Energy Consumption and Economic Growth in the Kingdom of Bahrain

has scrutinizes the linkage between energy consumption and output, suggesting that en- ergy consumption and output may be jointly determined and the direction of causality between these two variables needs to be tested. Following the seminal work of Kraft and Kraft (1978), several others including Masih and Masih (1997), Yang (2000), Wolde- Rufael (2009), Apergis and Payne (2009) and Ozturk et al. (2010) have tested the energy consumption and economic growth nexus with a variety of techniques and for different panel of countries. Looking at the region of Gulf Cooporation Council (GCC), Al-Iriani (2006) investigates the causality relationship between gross domestic product (GDP) and energy consumption in the six countries of the Gulf Cooperation Council (GCC). Re- cently developed panel cointegration and causality techniques are used to uncover the direction of energyŰGDP causality in the GCC. Empirical results indicate a unidirec- tional causality running from GDP to energy consumption. Evidence shows no support for the hypothesis that energy consumption is the source of GDP growth in the GCC countries. Such results suggest that energy conservation policies may be adopted with- out much concern about their adverse effects on the growth of GCC economies. In the same context context, Hamdi et al. (2014) explores the relationship between electricity consumption, foreign direct investment, capital and economic growth in the case of the Kingdom of Bahrain. The Cobb-Douglas production is used over the period of 1980 - 2010. Using autoregressive distributed lag (ARDL), a cointegration relationship has been detected among the series. It is found that electricity consumption, foreign direct invest- ment and capital add in economic growth. However, empirical works do not provide any precise answer, and there is still no consensus among economists whether there is a causal relationship or not and if it exists, there is no clear-cut answer about the direction of this causation (Ozturk, 2010). The contradictory results may occur due to the differences in data sets, characteristics of the investigated countries, variables that are included in the studies, and the diversification in using econometric methodologies (Ozturk, 2010).
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A Review of the Nexus Between Energy consumption and Economic growth in the Brics countries

A Review of the Nexus Between Energy consumption and Economic growth in the Brics countries

A multi-country study was conducted by Vidyarthi (2014) to investigate the relationship between energy consumption, carbon emissions and economic growth for 5 South Asian countries: Bangladesh, India, Pakistan, Nepal and Sri Lanka. The study used Pedroni’s co -integration test to determine the long term relationship among the variables and panel VECM Granger-causality to find the direction of causality between the variables. In using data for the period between 1972 and 2009, the study found that there exists a long term relationship between energy consumption, carbon emissions and economic growth in all these countries. The VECM Granger-causality suggested bidirectional causality between energy consumption and economic growth, a unidirectional causality flowing from carbon emissions to economic growth and energy consumption in the long term. The short term results identified a unidirectional causality flowing from energy consumption to carbon emissions.
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The relationship between energy consumption and economic growth: evidence from Thailand based on NARDL and causality approaches

The relationship between energy consumption and economic growth: evidence from Thailand based on NARDL and causality approaches

Recently, the relationship between energy consumption and economic growth has been extensively investigated in a non-stationary setting by using a Vector Error Correction Model (VECM) to test for Granger causality (Cheng and Lai 1997, Stern 2000, Narayan and Singh 2007, Ghosh 2009). For example, Cheng and Lai (1997) confirm the presence of a unidirectional Granger causality running from economic growth to energy consumption for Taiwan in the period from 1955 to 1993. In a similar study, Dhungel (2008) found unidirectional causality running from per capita energy consumption using Granger causality test to determine the relationship between energy consumption and economic growth in Nepal during 1980-2004. The same causal relationship is obtained by Narayan and Singh (2007) when applying a production function, in which they incorporate the labor factor as an additional component of the relationship on Fiji for the period from 1971 to 2002. Thure Traber (2008) expressed relationship energy and economic growth using Granger Causality results asserted that energy demand is likely to increase as long as we experience economic growth.
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A Re-Examination of the Relationship between Electricity Consumption and Economic Growth in India

A Re-Examination of the Relationship between Electricity Consumption and Economic Growth in India

The availability of required power is a parameter of economic growth and economic growth leads to growth in demand for power. Although there has been an immense consensus that power is the software of economic growth, the causal relationship and a precise economic link between per capita energy consumption and economic growth at an individual country level have been scant (Bhaskar, 2013). This relationship has gained significant importance, as it is mandatory to know the same to frame relevant policies at the aggregate level. Further, studies on causal relationships between the electricity consumption and economic growth for long-period data of India are limited. The growth, conservative, feedback, and neutrality are the four major hypotheses to know the direction of a causal relationship between economic growth and energy consumption. The growth hypothesis exists when electricity consumption affects economic growth (Unidirectional) and the conservative hypothesis is vice versa. When both electricity consumption and economic growth affect each other then there is a feedback hypothesis (Bidirectional) but if both are independent it becomes neutrality hypothesis (Independent) (Singh & Mann, 2020). In the view of the importance of energy consumption and economic growth, the aim of the present study is to examine whether the direction of the relationship between per capita electricity consumption and per capita GDP is unidirectional, bidirectional or independent, which is so far lacking in the available scientific literature.
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THE CAUSAL RELATIONSHIP BETWEEN LIFE INSURANCE BUSINESS AND ECONOMIC GROWTH IN NIGERIA

THE CAUSAL RELATIONSHIP BETWEEN LIFE INSURANCE BUSINESS AND ECONOMIC GROWTH IN NIGERIA

ISSN : 2351-8014 Vol. 4 No. 2, Jul. 2014 101 Life insurance companies play an increasingly important role within the financial sector. While during the period 1980-85 total assets of life insurance companies constituted only 11% of GDP for a sample of 13 countries, for which data were available, they constituted 28% for the period 1995-97 in the same countries. This increased importance was also reflected in the business volume of life insurers. Whereas life insurance penetration – the ratio of premium volume to GDP – was at 1.2% during the period 1961-65, it reached 4.2% in the period 1996-2000 for a sample of 19 countries, for which data were available (Beck and Webb, 2002). While this increased importance of life insurance both as provider of financial services and of investment funds on the capital markets is especially pronounced for developed countries, many developing countries still experience very low levels of life insurance consumption, which affects the contribution of life insurance business to economic growth. Beck and Webb (2002) however, stated that even within the group of developing countries, there are striking differences. While South Africa’s penetration ratio was 12.7% over the period 1996-2000, Syria’s was less than 0.01%. Given the large variation in the use of life insurance across countries, the question of the causes of this variation and therefore the effect of life assurance business on economic growth arises.
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The Relationship Between Economic Growth and Fossil Fuel  Energy Consumption Growth in Net Energy-Importing Emerging Economies

The Relationship Between Economic Growth and Fossil Fuel Energy Consumption Growth in Net Energy-Importing Emerging Economies

Second, were the running costs for steam engines lower than water since a cost advantage could have tipped the British industrialists’ hand in favor of fossil fuel-powered technology? To answer this question a cost comparison between water and fossil fuel-based energy production is required. Both water wheels and steam engines required significant capital expenditure. In the case of water wheels, the wheel had to be constructed and placed in a “wheel-house.” At the same time, a system of conduits had to be constructed to channel water to the wheel along with a dam for storing water. In the case of steam engines, metals like brass, copper and iron were required for constructing the pipes and the boiler. This process called for significant expenditure in the shape of specialized paraphernalia and skilled labor. However, in terms of day-to-day running costs, water wheels were cheaper per horsepower generated as once the lease to a certain stream had been acquired, marginal costs associated with running a water wheel were essentially negligible (Malm, 2013). In the case of steam engines, marginal costs were significant as coal had to be continually purchased and transported to the factories. Again, what this points out is that additional sources of water power could have been developed relatively cheaply and that there is no obvious business case for the fossil fuel turn in British industrial production.
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The Relationship between Energy Consumption and Economic Growth in the USA: A Non Linear ARDL Bounds Test Approach

The Relationship between Energy Consumption and Economic Growth in the USA: A Non Linear ARDL Bounds Test Approach

Some authors try to deal with both non-stationarity and non-linearity in the co-integrating modeling strategy, since the mid-1990s. This extended section of co-integration research may be described as the primacy of three regime switch- ing models. The first one is the threshold error correction model developed by [51]. The Markov-switching error correction model of [59] is the second regime switching model. The last model is the smooth transition errorcorrectionmodel developed by [60]. The development of this literature reflects a general consider- ation that the assumption of linear adjustment may be excessively restrictive in a wide range of economically interesting situations. However, the majority of these studies are built on another overly restrictive assumption that the long-run relationship may be represented as a symmetric linear combination of non-sta- tionary stochastic regressors.
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ENERGY CONSUMPTION AND ECONOMIC GROWTH:

ENERGY CONSUMPTION AND ECONOMIC GROWTH:

This paper investigates the relationship between energy consumption and economic growth of Pakistan. A time series data has been used for the period of 1973-2006. GDP is taken as dependent variable and energy consumption as independent variable. Augmented Dicky Fuller test has been used to check the stationary of the variables and both variables found stationary at level. The results of Granger causality test show uni- directional causality running from GDP to energy consumption. The results of ordinary least squares test show positive relation between GDP and energy consumption in Pakistan. One percent increase in energy consumption will raise GDP by 1.23%. Diagnostic tests confirm that residuals are normally distributed, coefficients are stable and there is no ARCH effect. Pakistan economy is energy dependent. Shortage of energy means lower the economic growth of Pakistan. We should utilize our own sources to meet the needs of energy like by constructing biogas plants in villages and solar energy is also alternative source. This can reduce the dependency on foreign sources.
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