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Revisiting the economic growth and electricity consumption nexus in Pakistan

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Abstract

This paper revisits the interaction between electricity consumption, real gross domestic product, and carbon dioxide emissions in Pakistan. To this end, our study relies on annual data from 1971 to 2014 for the econometric analysis while accounting for structural break(s). According to the Maki cointegration test, a cointegration equilibrium relationship exists among electricity consumption, economic growth, and carbon dioxide emissions. The empirical findings from Toda-Yamamoto causality test provided the following insights: (i) unidirectional causality was found running from economic growth to electricity consumption. Thus, this study validates the conservative hypothesis, meaning that in Pakistan, conservative energy strategies cannot harm economic progress. (ii) Causality was also found running from electricity consumption to carbon dioxide emissions. This implies that industrial activities trigger an increase in carbon emissions flaring which in return translates into environmental degradation. This outcome has inherent policy implications which are further discussed in the conclusion section.

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Notes

  1. For brevity, interested readers can see Payne (2010) literature survey studies on electricity growth nexus.

  2. The data set is trimmed bases on data availability and for uniformity of estimations, given that carbon dioxide emissions and electricity consumption are available in 2014 on the WDI database. Available at https://data.worldbank.org/

  3. The authors are appreciative to Daiki Maki of the Faculty of Economics, Ryukoku University, for the availability of the codes in GAUSS that facilitated simulation of the cointegration results.

  4. For brevity, the results of the Johansen cointegration also reconcile with the Maki cointegration test results. The simulation can be made available upon request.

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  1. Department of Economics, Eastern Mediterranean University, Famagusta, Turkish Republic of North Cyprus, Turkey

    Mehmet Balcilar, Festus Victor Bekun & Gizem Uzuner

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  1. Mehmet Balcilar
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  2. Festus Victor Bekun
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Balcilar, M., Bekun, F.V. & Uzuner, G. Revisiting the economic growth and electricity consumption nexus in Pakistan. Environ Sci Pollut Res 26, 12158–12170 (2019). https://doi.org/10.1007/s11356-019-04598-0

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