Revisiting the Relationship between Coal Consumption and Economic Growth: Cointegration and Causality Analysis in Pakistan
AbstractThe paper re-visits the relationship between coal consumption and economic growth by including other supporting variables such as capital use and labor participation rate in Pakistan over the 1972-2009 period. The paper adopts an augmented neoclassical production framework. In doing so, for the long run relationship between the variables, the ARDL bounds testing approach to cointegration is applied. The VECM Granger causality procedure is used to detect the direction of causality between coal consumption and economic growth while an innovative accounting approach is used to check the robustness of causality results. Empirical exercise confirms a long run relationship between the variables. The results suggest that coal consumption, capital use and the labor participation rate have positive impact on economic growth. Causality analysis indicates bidirectional causal relation between coal consumption and economic growth and results are robust through innovative accounting approach. This implies that energy (coal) conservation policies may retard economic growth that in turn lowers the demand of coal.
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Bibliographic InfoArticle provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.
Volume (Year): 12 (2012)
Issue (Month): 1 ()
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Find related papers by JEL classification:
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
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