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Is energy consumption sensitive to foreign capital inflows and currency devaluation in Pakistan?

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  • Muhammad Shahbaz
  • Amatul Razzaq Chaudhary
  • Syed Jawad Hussain Shahzad

Abstract

This study investigates the relationship between foreign capital inflows and energy consumption by incorporating economic growth, exports and currency devaluation in energy demand function for the case of Pakistan. The long-run and short-run effects are examined via ARDL bounds testing procedure. Foreign capital inflows and currency devaluation (economic growth and exports) decrease (increase) energy consumption in long-run. The results confirm a feedback effect between foreign capital inflows and energy consumption. These findings would be helpful to policy makers in designing comprehensive economic and energy policies for utilizing foreign capital inflows as a tool for optimal use of energy sources to enhance economic development in long run.

Suggested Citation

  • Muhammad Shahbaz & Amatul Razzaq Chaudhary & Syed Jawad Hussain Shahzad, 2018. "Is energy consumption sensitive to foreign capital inflows and currency devaluation in Pakistan?," Applied Economics, Taylor & Francis Journals, vol. 50(52), pages 5641-5658, November.
  • Handle: RePEc:taf:applec:v:50:y:2018:i:52:p:5641-5658
    DOI: 10.1080/00036846.2018.1488059
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