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Finding the cointegration and causal linkages between the electricity production and economic growth in Pakistan

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  • Zeshan, Muhammad

Abstract

The present study reveals the impact of electricity production on economic growth in Pakistan. It covers the period of 1975–2010, and assumes a log-linear relationship between the variables. The bounds test for cointegration indicates a unique long-run relationship between the variables. Moreover, it finds that sub-optimal electricity production is eroding the private business investment in the short run. Based on these facts, this study advocates the promotion of hydropower plants that are beneficial for two reasons. First, it would produce clean power in the country. Second, the cost of production would also drop resulting in lower tariff rates. Finally, it finds bidirectional causal relationship between the variables in the long run whereas no causal relationship is found in the short run.

Suggested Citation

  • Zeshan, Muhammad, 2013. "Finding the cointegration and causal linkages between the electricity production and economic growth in Pakistan," Economic Modelling, Elsevier, vol. 31(C), pages 344-350.
  • Handle: RePEc:eee:ecmode:v:31:y:2013:i:c:p:344-350
    DOI: 10.1016/j.econmod.2012.11.021
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    2. Mohd Arshad Ansari & Pushp Kumar & Muhammed Ashiq Villanthenkodath, 2023. "Impact of renewable and non-renewable electricity generation on economic growth in India: an application of linear and nonlinear models," Journal of Regulatory Economics, Springer, vol. 63(3), pages 138-158, June.
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    9. Sebastian Majewski & Urszula Mentel & Raufhon Salahodjaev & Marek Cierpiał-Wolan, 2022. "Electricity Consumption and Economic Growth: Evidence from South Asian Countries," Energies, MDPI, vol. 15(4), pages 1-10, February.
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    More about this item

    Keywords

    Hydropower; Cointegration; Causality;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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