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The focus and prime purpose of this study is to find out the association between Economic growth (EG) and Energy consumption (EC) for the economy of Pakistan. In the time series framework, econometric techniques were employed i.e. ADF Unit Root Test (URT), Granger Causality Test (GCT), Johansen cointegration Test (JCT), ARDL and ECM. The findings o...
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Citations
... They found a unidirectional relationship from energy consumption to economic growth and over the study period, within a multivariate framework, they established a long-run unidirectional relationship flowing from energy consumption to economic growth. Other studies include [32] for Pakistan [33], for China [34], for India, Brazil and Uruguay [35], to mention a few. ...
The aftermath of the COVID-19 pandemic has two striking impacts on the economy of the
Kingdom of Saudi Arabia. First, the economic contraction of business and economic activities. Second, the effect of oil prices dropping as energy demand decreases in the international market. This study seeks to underpin the linkage between GDP growth, oil price, foreign direct investment (FDI), air transport, social globalization and carbon dioxide emission by applying time-series econometrics techniques of the following: fully modified ordinary least squares, dynamic ordinary least squares and canonical tests. The results of the Johansen cointegration test and empirical analysis trace a long-run equilibrium relationship between the highlighted variables. Our study shows that a 1%
increase in FDI attraction increases economic growth by 0.004%; similarly, air transport and oil rent from KSA increased economic growth by 0.547% and 0.005%, respectively. These outcomes are indicative of the GDP growth ambition of the KSA economy in order to intensify FDI attraction and the air transportation sector. However, we also observe that increases in CO2 emission increase GDP growth. Thus, this suggests that the economic growth in KSA is not green, indicating the need for green economic growth pursuit targets.
... Muhammad et al. [44] 1971-2013 EC-Y 3. ...
... Some of the studies, considering different forms of energy (electricity, natural gas, nuclear energy, etc.), claim bidirectional causality between EC and EG (see for example, Shahbaz and Lean [23], Hye and Riaz [33], Shahbaz et al., [34,35], Javed et al., [36], Akhmat and Zaman [37], Abbas and Choudhury [38]). Some studies suggest one-way causation that goes from EC to EG (e.g., Mushtaq et al., [39], Asghar [40], Khan and Ahmad [41], Kakar and Khilji [42], Chaudhry et al., [43], Muhammad et al. [44] etc.). Other studies claim a one-way causation that runs from EG to EC. (e.g., Aqeel and Butt [45], Jamil and Ahmad [46], Bedi-uz-Zaman et al., [47], Shahbaz and Feridun [48], Ahmad et al. [49], etc.). ...
This study is a meta-analytic investigation of energy consumption and economic growth. It makes a literature survey on the dynamic causal relationship between broad variables of energy and economic growth for the period 1974–2021. The objective of this study is to investigate stationarity, cointegration and direction of causality between energy consumption and economic growth. It uses survey methods to profile related literature of the energy consumption–economic growth nexus. It tests four established hypotheses, feedback, growth, conservation and neutrality. It concentrates on both country as well as multi-country panel based studies. The variables chosen, econometric as well as theoretical models, time periods has contributed to the increased level of disagreement. The results are thoroughly mixed with no agreement, some studies are explicit on the degree to which results are contentious. There is no consensus for both country specific as well as panel based studies. On the whole the growth hypothesis is the most dominant outcome for country based studies. Our findings indicate that this debate is inconclusive with growth hypothesis accounting for 43.8%, feedback 18.5%, conservation 27.2%, and neutrality hypothesis 10.5% for country specific studies. This study gives a footprint of the state of the art and stimulates the level of debate for researchers on energy consumption and economic growth.
This paper examines the relationship between energy consumption and economic growth in Botswana during the period 1980–2016. We disaggregate energy consumption into six components, namely: total energy consumption, electricity consumption, motor gasoline, gas/diesel oil, fuel oil and liquefied petroleum gas. We then compare the results of the disaggregated energy components with that of the aggregated energy consumption level. In order to account for the omission-of-variable bias, we incorporate inflation and trade openness as intermittent variables between the various components of energy consumption and economic growth, thereby creating a system of multivariate equations. Using the ARDL-bound testing approach, the study found a causal flow from economic growth to energy consumption to predominate. This finding has important policy implications as it shows that the buoyant economic growth that Botswana has enjoyed over the years is not energy-dependent, and that the country could pursue the requisite energy conservation policies without necessarily stifling its economic growth. To our knowledge, this study may be the first of its kind to examine in detail the causal relationship between energy consumption and economic growth in Botswana using a multivariate causality model and a disaggregated dataset.
During the last 4 decades, the world has changed its focus from imported energy resources to cheap resources either renewable or non-renewable for economic and social development. Currently, coal is the cheapest source of energy in Pakistan that can be used to fulfil the energy demands. This study inspects the causal association among domestic factors such as gross domestic product, coal consumption, rural–urban unemployment, rural–urban population, fiscal deficit and services value added from 1981 to 2017. This paper applies modern techniques to inspect the association between coal consumption and economic development of Pakistan. For this, Ng–Perron unit root test, autoregressive distributed lag models and vector error correction models are employed to examine the causalities between the factors. The research finds a long-run and short-run bidirectional association between economic improvement and coal use. In the short run, the results found a bidirectional causality among gross domestic product (GDP), coal consumption, unemployment, population and overall fiscal deficit. In the long run, GDP and coal use have a bidirectional association and the same is true with the other factors. During the period, cumulative sum (CUSUM) and CUSUM square have proved that structure is good. Moreover, we support the coal consumption in producing cheap energy that clues to financial development and unemployment reduction in Pakistan. The policy suggestions for the consequences are provided below.
This paper examines the dynamic causal linkages between electricity consumption and economic growth in Nigeria within a trivariate VECM, for the period 1971-2011. The paper obviates the variable omission bias, and the use of cross-sectional techniques that characterise most existing studies. The results show that there is a distinct causal flow from electricity consumption to economic growth: both in the short run and in the long run. This finding supports the electricity-led growth hypothesis that has been conjectured in the literature. The paper urges policy-makers in Nigeria to implement policies which enhance the generation and consumption of electricity in order to engineer economic growth. Appropriate monetary policies must also be put in place, in order to moderate inflation, thus enhancing growth.
The main aims of this study were to determine the conditions that influence electric power consumption in Ghana and also estimate the extent to which electric power consumption impact on the various sectors of the Ghanaian economy. The ordinary least squares method of data estimation technique was used. The models specified were indentified to be good models. This revealed that the major factors that influence electricity consumption in Ghana are population, the size of the Ghanaian economy, foreign inflows, the general price level, and trade. The study also revealed that electric power consumption affected agricultural production in Ghana negatively and the margin of the decrease was 0.0284186. More so, the study identified that electricity consumption had a positive effect on manufacturing sector of the Ghanaian economy though its value was statistically insignificant. The degree of the elasticity was 0.072129. Finally, the study showed that electric power consumption affected the services output negatively. The degree of the effect was 0.0245882. This study strongly concludes that more electric power supply should be allocated to the manufacturing sector of Ghana to promote sustainable economic growth and development.
Aims of the study were to critically examine the extent to which electricity consumption influences economic growth in Ghana and also determine, if it is electricity consumption that causes economic growth in Ghana or otherwise. The study employed Augmented Dickey-Fuller test, Cointegration test, Vector Error Correction Model and Granger Causality test. The study revealed that, in the long term, a hundred percent increase in electricity power consumption will cause real gross domestic product per capita to increase by approximately fifty-two percent. However, in the short run, electricity consumption negatively affects real gross domestic product per capita. The study again revealed that unidirectional causality run from electricity consumption to economic growth meaning that any policy actions taken to affect the smooth consumption of electricity in Ghana will definitely affect her gross domestic product per capita. Therefore, the current load shedding policy due to low supply of electricity will definitely affect the Ghanaian economy negatively, that is lower production levels, high inflation, and high rates of unemployment and lower standard of living. Therefore, the government of Ghana should invest massively into electricity infrastructure and conservation measures to meet the needs of the various sectors of the Ghanaian economy.
This paper examines the dynamic causal relationship between electricity consumption and economic growth in Ghana within a trivariate ARDL framework, for the period 1971–2012.The paper obviates the variable omission bias, and the use of cross-sectional techniques that characterise most existing studies. The results show that there is a distinct causal flow from economic growth to electricity consumption: both in the short run and in the long run. This finding supports the growth-led electricity consumption hypothesis, as documented in the literature. The paper urges policymakers in Ghana to resort to alternative sources of electric power generation, in order to reduce any future pressures on the current sources of
electricity production. Appropriate monetary policies must also be put in place, in order to accommodate potential inflation hikes stemming from excessive demands for electricity in the near future.
Aims of the study were to critically examine the extent to which electricity consumption influences economic growth in Ghana and also determine, if it is electricity consumption that causes economic growth in Ghana or otherwise. The study employed Augmented Dickey-Fuller test, Cointegration test, Vector Error Correction Model and Granger Causality test. The study revealed that, in the long term, a hundred percent increase in electricity power consumption will cause real gross domestic product per capita to increase by approximately fifty-two percent. However, in the short run, electricity consumption negatively affects real gross domestic product per capita. The study again revealed that unidirectional causality run from electricity consumption to economic growth meaning that any policy actions taken to affect the smooth consumption of electricity in Ghana will definitely affect her gross domestic product per capita. Therefore, the current load shedding policy due to low supply of electricity will definitely affect the Ghanaian economy negatively, that is lower production levels, high inflation, and high rates of unemployment and lower standard of living. Therefore, the government of Ghana should invest massively into electricity infrastructure and conservation measures to meet the needs of the various sectors of the Ghanaian economy.
