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Electricity consumption and economic growth in Pakistan: menace of circular debt

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  • Sehrish Liaquat
  • Haider Mahmood

Abstract

This study explores the causal links among electricity consumption, circular debt and economic growth. Covering the time span from 2005-2015 and using quarterly data, Granger causality based on vector error correction model (VECM) is employed to find the direction of causality after confirming cointegration. Next, the robustness of causality results is determined through variance decomposition analysis (VDA). The present study finds short run bidirectional relationship between circular debt and economic growth and between electricity consumption and economic growth as well. On the other hand, long run unidirectional causality is found running from circular debt and economic growth to electricity consumption. The findings of VDA reinforce causality results. The study finds that Pakistan despite being rich in natural resources (coal, water) is entangled in the web of circular debt that has made the blessings as curse which shows an example of poor governance. The results of study based on two econometric tools conclude with little more conviction that there is a need for exploitation of indigenous resources and wise allocation of available resources for electricity production and suggests electricity conservation policies including improvement of distribution and transmission capacity of its power system to reduce wastage of electricity along with less reliance on oil consumption in electricity production.

Suggested Citation

  • Sehrish Liaquat & Haider Mahmood, 2017. "Electricity consumption and economic growth in Pakistan: menace of circular debt," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 13(3), pages 227-245.
    • Handle: RePEc:ids:ijecbr:v:13:y:2017:i:3:p:227-245
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    Citations

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    Cited by:

    1. Nabil Ahmed Mareai Senan & Haider Mahmood & Sehrish Liaquat, 2018. "Financial Markets and Electricity Consumption Nexus in Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(1), pages 12-16.
    2. Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Sultan, Zafar Ahmad & Ahmad, Nawaz, 2017. "Financial Market Development and Employment Nexus in Saudi Arabia," MPRA Paper 109450, University Library of Munich, Germany.
    3. Mahmood, Haider & Chaudhary, A. R., 2013. "Impact of FDI on Income Inequality in Pakistan," MPRA Paper 109460, University Library of Munich, Germany.
    4. Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Sultan, Zafar Ahmad & Ahmad, Nawaz, 2017. "Trade Openness and Employment Nexus in Saudi Arabia," MPRA Paper 109451, University Library of Munich, Germany.
    5. Mahmood, Haider & Alkhateeb, Tarek Tawfik Yousef & Ahmad, Nawaz, 2017. "Impact of Devaluation on Foreign Trade in Saudi Arabia," MPRA Paper 109452, University Library of Munich, Germany.
    6. Al-Qahtani, Maleeha Mohammed Zaaf & Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Abdalla, Manal Abdalla Zahed & Mawad, Ghada Shihata Ebrahim & Alkhatib, Maha Ahmed Hussein, 2020. "Exploring the Level of Managerial, Political, Academic, Economic and Social Women Empowerment in Saudi Arabia," MPRA Paper 109447, University Library of Munich, Germany.
    7. Mahmood, Haider, 2018. "An Investigation of Macroeconomic Determinants of FDI Inflows in Bangladesh," MPRA Paper 109448, University Library of Munich, Germany.
    8. Alkhateeb, Tarek Tawfik Yousef & Alkahtani, Nasser Saad & Mahmood, Haider, 2017. "Assessing the Role of Foreign Labour on Saudi Labour Unemployment in Saudi Arabia," MPRA Paper 109449, University Library of Munich, Germany.
    9. Mahmood, Haider & Alkhateeb, Tarek Tawfik, 2017. "An Estimation of Service Quality in King Khalid Hospital, Saudi Arabia," MPRA Paper 109453, University Library of Munich, Germany.
    10. Mahmood, Haider & Alkhateeb, Tarek Tawfik Yousef & Ahmed, Nawaz, 2017. "Impact of devaluation on Saudi oil exports: The J-Curve analysis," MPRA Paper 109454, University Library of Munich, Germany.
    11. Alexander Bass, 2018. "Financial Markets and Electricity Consumption Nexus in Russia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(3), pages 82-86.
    12. Mahmood, Haider & Alkhateeb, Tarek Tawfik Yousef & Ahmed, Nawaz, 2017. "Impact of Devaluation on Industrial Exports in Saudi Arabia: J-Curve Hypothesis," MPRA Paper 109455, University Library of Munich, Germany.

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