IDEAS home Printed from https://ideas.repec.org/a/ijr/beejor/v3y2015i2p48-65.html
   My bibliography  Save this article

Electricity Consumption, Financial Development and Economic Growth Nexus in Pakistan: A Visit

Author

Listed:
  • Muhammad Shahbaz

    (Department of Management Sciences, COMSATS Institute of Information Technology, Lahore, Pakistan)

Abstract

This study explores a relationship between electricity consumption and economic growth in Pakistan by incorporating financial development within the neoclassical production function. The Autoregressive Distributed Lag (ARDL) bounds testing approach has been applied to data from 1972-2012. To test causality among the series, the vector error correction model (VECM) has been used; supplemented by the innovative accounting approach (IAA) to check for the robustness of causality. Our findings confirm cointegration. The results indicate that financial development, electricity consumption, capital and labor promote economic growth. The causality analysis shows the feedback effect between electricity consumption and economic growth, and financial development and electricity consumption. Finally, economic growth and financial development Granger cause each other. This implies that electricity conservation policies may not help. The government of Pakistan should encourage R and D in an effort to develop new energy savings technology for sustained economic growth.

Suggested Citation

  • Muhammad Shahbaz, 2015. "Electricity Consumption, Financial Development and Economic Growth Nexus in Pakistan: A Visit," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 3(2), pages 48-65, June.
    • Handle: RePEc:ijr:beejor:v:3:y:2015:i:2:p:48-65
    as

    Download full text from publisher

    File URL: http://tesdo.org/shared/upload/pdf/papers/BEE.3_2_48-65.pdf
    Download Restriction: no
    File URL: http://tesdo.org/journal_detail.php?paper_id=127&expand_year=2015
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.
    2. Kashif Abbass & Abdul Aziz Khan Niazi & Abdul Basit & Tehmina Fiaz Qazi & Huaming Song & Halima Begum, 2021. "Uncovering Effects of Hot Potatoes in Banking System: Arresting Die-Hard Issues," SAGE Open, , vol. 11(4), pages 21582440211, December.
    3. Kyophilavong, Phouphet & Shahbaz, Muhammad & Kim, Byoungki & OH, Jeong-Soo, 2017. "A note on the electricity-growth nexus in Lao PDR," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 1251-1260.
    4. Mahalik, Mantu Kumar & Babu, M. Suresh & Loganathan, Nanthakumar & Shahbaz, Muhammad, 2017. "Does financial development intensify energy consumption in Saudi Arabia?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 1022-1034.
    5. Dakpogan, Arnaud & Smit, Eon, 2018. "Effect of negative shocks to electricity consumption on negative shocks to economic growth in Benin," MPRA Paper 89539, University Library of Munich, Germany.
    6. Baz, Khan & Xu, Deyi & Ampofo, Gideon Minua Kwaku & Ali, Imad & Khan, Imran & Cheng, Jinhua & Ali, Hashmat, 2019. "Energy consumption and economic growth nexus: New evidence from Pakistan using asymmetric analysis," Energy, Elsevier, vol. 189(C).
    7. Shahbaz, Muhammad, 2015. "Measuring Economic Cost of Electricity Shortage: Current Challenges and Future Prospects in Pakistan," MPRA Paper 67164, University Library of Munich, Germany, revised 12 Oct 2015.
    8. Uddin, Md. Kamal & Pan, Xiongfeng & Saima, Umme & Zhang, Chengming, 2022. "Influence of financial development on energy intensity subject to technological innovation: Evidence from panel threshold regression," Energy, Elsevier, vol. 239(PD).
    9. Baz, Khan & Cheng, Jinhua & Xu, Deyi & Abbas, Khizar & Ali, Imad & Ali, Hashmat & Fang, Chuandi, 2021. "Asymmetric impact of fossil fuel and renewable energy consumption on economic growth: A nonlinear technique," Energy, Elsevier, vol. 226(C).
    10. Shahbaz, Muhammad & Sinha, Avik & Kontoleon, Andreas, 2020. "Decomposing Scale and Technique Effects of Economic Growth on Energy Consumption: Fresh Evidence in Developing Economies," MPRA Paper 102111, University Library of Munich, Germany, revised 27 Jul 2020.
    11. Pan, Xiongfeng & Uddin, Md. Kamal & Han, Cuicui & Pan, Xianyou, 2019. "Dynamics of financial development, trade openness, technological innovation and energy intensity: Evidence from Bangladesh," Energy, Elsevier, vol. 171(C), pages 456-464.
    12. Mohamed, Hassen & Alimi, Mohsen & Ben Youssef, Slim, 2021. "The role of renewable energy in reducing terrorism: Evidence from Pakistan," Renewable Energy, Elsevier, vol. 175(C), pages 1088-1100.
    13. Dakpogan, Arnaud & Smit, Eon, 2018. "The effect of electricity losses on GDP in Benin," MPRA Paper 89545, University Library of Munich, Germany.
    14. Pan, Xiongfeng & Uddin, Md. Kamal & Saima, Umme & Guo, Shucen & Guo, Ranran, 2019. "Regime switching effect of financial development on energy intensity: Evidence from Markov-switching vector error correction model," Energy Policy, Elsevier, vol. 135(C).
    15. Mehmet Akif Destek, 2015. "Energy Consumption, Economic Growth, Financial Development and Trade Openness in Turkey: Maki Cointegration Test," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 3(4), pages 162-168, December.
    16. Awad, Atif, 2019. "Does economic integration damage or benefit the environment? Africa's experience," Energy Policy, Elsevier, vol. 132(C), pages 991-999.
    17. Ahmed, Khalid, 2017. "Revisiting the role of financial development for energy-growth-trade nexus in BRICS economies," Energy, Elsevier, vol. 128(C), pages 487-495.
    18. Muhammad Shahbaz & Avik Sinha & Andreas Kontoleon, 2022. "Decomposing scale and technique effects of economic growth on energy consumption: Fresh evidence from developing economies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 1848-1869, April.
    19. Roubaud, David & Shahbaz, Muhammad, 2018. "Financial Development, Economic Growth, and Electricity Demand: A Sector Analysis of an Emerging Economy," MPRA Paper 87212, University Library of Munich, Germany, revised 06 Jun 2018.
    20. Kahouli, Bassem, 2018. "The causality link between energy electricity consumption, CO2 emissions, R&D stocks and economic growth in Mediterranean countries (MCs)," Energy, Elsevier, vol. 145(C), pages 388-399.
    21. Furuoka, Fumitaka, 2017. "Renewable electricity consumption and economic development: New findings from the Baltic countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 450-463.
    22. Cher Chen & GholamReza Zandi Pour & Edwin R. de los Reyes, 2020. "Financial Development and Economic Growth in Asian Countries: A Panel Empirical Investigation," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 6(2), pages 76-84.

    More about this item

    Keywords

    Electricity Consumption; Financial Development; Economic Growth; Pakistan;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ijr:beejor:v:3:y:2015:i:2:p:48-65. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Muhammad Shahbaz (PhD Applied Economics) (email available below). General contact details of provider: https://edirc.repec.org/data/tesdopk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.