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The Dynamics of Electricity Consumption and Economic Growth:A Revisit Study of Their Causality in Pakistan

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  • Muhammad, Shahbaz
  • Lean, Hooi Hooi

Abstract

This study revisits the relationship between electricity consumption and economic growth in Pakistan by controlling and investigating the effects of two major production factors - capital and labor. The empirical evidence confirms the cointegration among the variables and indicates that electricity consumption has a positive effect on economic growth. Moreover, bi-directional Ganger causality between electricity consumption and economic growth has been found. The findings suggests that adoption of electricity conservation policies to conserve energy resources may unwittingly decline growth and the lower growth rate will in turn further decrease the demand for electricity. Therefore, governments contemplating such conservationist policies should instead explore and develop alternate sources of energy as a strategy rather than just increasing electricity production per se in order to meet the rising demand for electricity in their quest towards sustaining development in the country.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33196.

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Date of creation: 01 Sep 2011
Date of revision: 06 Sep 2011
Handle: RePEc:pra:mprapa:33196

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Keywords: Electricity Consumption; Economic Growth; Ganger Causality;

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References

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Citations

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Cited by:
  1. Saleheen, Khan & Farooq Ahmed, Jam & Muhammad, Shahbaz, 2012. "Electricity Consumption and Economic Growth in Kazakhstan: Fresh Evidence from a Multivariate Framework Analysis," MPRA Paper 43460, University Library of Munich, Germany, revised 20 Dec 2012.
  2. Muhammad, Shahbaz & Tiwari, Aviral Kumar & Khan, Saleheen, 2012. "Is Energy Consumption Per Capita Stationary? Evidence from First and Second Generation Panel Unit Root Tests," MPRA Paper 41607, University Library of Munich, Germany, revised 27 Sep 2012.
  3. Shahbaz, Muhammad & Lean, Hooi Hooi & Farooq, Abdul, 2013. "Natural gas consumption and economic growth in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 18(C), pages 87-94.
  4. Muhammad, Shahbaz & Muhammad, Zeshan & Talat, Afza, 2012. "Is energy consumption effective to spur economic growth in Pakistan? new evidence from bounds test to level relationships and Granger causality tests," MPRA Paper 39734, University Library of Munich, Germany, revised 29 Jun 2012.
  5. Muhammad, Shahbaz & Qazi, Muhammad Adnan Hye & Muhammad, Zeshan, 2012. "Is Renewable Energy Consumption Effective to Promote Economic Growth in Pakistan: Evidence from Bounds Testing and Rolling Window Approach," MPRA Paper 41608, University Library of Munich, Germany, revised 27 Sep 2012.

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