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The Electricity Consumption and Economic Growth Nexus in Pakistan: A New Evidence

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  • Atif, Syed Muhammad
  • Siddiqi, Muhammad Wasif
Abstract
This study examines the Granger causality between electricity consumption and Gross Domestic Product (GDP) for Pakistan using annual data covering the period 1971 to 2007. Augmented Dickey-Fuller test and Phillips-Perron test reveal that both the series, after logarithmic transformation, are non-stationary and individually integrated at order one. Engle and Granger Cointegration test exhibits the absence of long-run relationship among the variables. Two tests of causality, standard Granger Causality test and Modified WALD test (T-Y test) affirm the existence of unidirectional Granger causality from electricity consumption to economic growth without any feedback effect. Therefore, an immediate effort to increase electricity availability is required and energy conservation policies are supposed to halt the economic growth.

Suggested Citation

  • Atif, Syed Muhammad & Siddiqi, Muhammad Wasif, 2010. "The Electricity Consumption and Economic Growth Nexus in Pakistan: A New Evidence," MPRA Paper 41377, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:41377
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    References listed on IDEAS

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    Cited by:

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    2. OSHOTA, Sebil, 2019. "Modelling Asymmetric effects of Electricity Consumption and Economic Growth in Nigeria: Fresh evidence from Asymmetric ARDL and Granger Causality," MPRA Paper 98271, University Library of Munich, Germany, revised 22 Jan 2020.
    3. Alexander Bass, 2018. "Does Electricity Supply Matter for Economic Growth in Russia: A Vector Error Correction Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 313-318.
    4. Yılmaz Bayar & Hasan Alp Özel, 2014. "Electricity Consumption and Economic Growth in Emerging Economies," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 4(2), pages 1-15, April.
    5. Furrukh Bashir, Ismat Nasim, Ammar Ismail, 2016. "Electricity Generation and Its Impact on Real GDP and Real Exports of Pakistan: A Co-integration Analysis," Journal of Management Sciences, Geist Science, Iqra University, Faculty of Business Administration, vol. 3(1), pages 52-67, March.
    6. Adnan RASHID & Naveed YOUSAF, 2015. "Linkage of financial development with electricity-growth, nexus of India and Pakistan," EuroEconomica, Danubius University of Galati, issue 2(34), pages 151-160, November.
    7. Xueqing Kang & Farman Ullah Khan & Raza Ullah & Muhammad Arif & Shams Ur Rehman & Farid Ullah, 2021. "Does Foreign Direct Investment Influence Renewable Energy Consumption? Empirical Evidence from South Asian Countries," Energies, MDPI, vol. 14(12), pages 1-15, June.
    8. Hayat, Farah & Pirzada, Muhammad Daniel Saeed & Khan, Abid Ali, 2018. "The validation of Granger causality through formulation and use of finance-growth-energy indexes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 1859-1867.
    9. Adeyemi A. Ogundipe & Opeyemi Akinyemi & Oluwatomisin M. Ogundipe, 2016. "Electricity Consumption and Economic Development in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 6(1), pages 134-143.
    10. Abbas, Faisal & Choudhury, Nirmalya, 2013. "Electricity consumption-economic growth Nexus: An aggregated and disaggregated causality analysis in India and Pakistan," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 538-553.
    11. Atif, Syed Muhammad & Srivastav, Mudit & Sauytbekova, Moldir & Arachchige, Udeni Kathri, 2012. "Globalization and Income Inequality: A Panel Data Analysis of 68 Countries," EconStor Preprints 65664, ZBW - Leibniz Information Centre for Economics.
    12. Smita Nath, 2020. "Relationship between Economic Growth and Electricity Consumption in India: A Re-Investigation," Energy Economics Letters, Asian Economic and Social Society, vol. 7(1), pages 23-35, June.

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    More about this item

    Keywords

    Electricity Consumption; Economic Growth; Pakistan;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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