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Is Renewable Energy Consumption Effective to Promote Economic Growth in Pakistan: Evidence from Bounds Testing and Rolling Window Approach

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  • Muhammad, Shahbaz
  • Qazi, Muhammad Adnan Hye
  • Muhammad, Zeshan

Abstract

The aim of present study is to re-investigate the impact of renewable energy consumption on economic growth by incorporating capital and labor as potential determinants of production function in case of Pakistan. We have used the ARDL bounds testing and rolling window approach (RWA) for cointegration. The causality analysis is conducted by applying the VECM Granger causality and innovative accounting approaches. The results showed that all the variables are cointegrated for long run relationship. Renewable energy consumption, capital and labor boost economic growth. The causality analysis indicated bidirectional causality between economic growth, renewable energy consumption and capital over the period of 1972Q1-2011Q4. The study opens up new directions for policy makers to explore new sources of energy sustain economic growth.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 41608.

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Date of creation: 20 Sep 2012
Date of revision: 27 Sep 2012
Handle: RePEc:pra:mprapa:41608

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Keywords: Renewable Energy; Economic Growth; Rolling Window Approach;

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  6. 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.
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  15. Shahbaz, Muhammad & Tang, Chor Foon & Shahbaz Shabbir, Muhammad, 2011. "Electricity consumption and economic growth nexus in Portugal using cointegration and causality approaches," Energy Policy, Elsevier, vol. 39(6), pages 3529-3536, June.
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