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Financial Development, Energy Consumption and CO2 Emissions: Evidence from ARDL Approach for Pakistan

  • Muhammad, Shahbaz
  • Faridul, Islam
  • Muhammad Sabihuddin, Butt

The paper explores the existence of a long run equilibrium relationship among CO2 emissions, financial development, economic growth, energy consumption, and population growth in Pakistan. ARDL bounds testing approach to cointegration is implemented to the data for 1974-2009. The results confirm a long run relation among these variables. Financial development appears to help reduce CO2 emissions. The main contributors to CO2 emissions however are: economic growth, population growth and energy consumption. Our results also lend support to the existence of Environmental Kuznets Curve for Pakistan. Based on the findings we argue that policy focus on financial development might be helpful in reducing environmental degradation.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 30138.

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Date of creation: 18 Feb 2011
Date of revision: 07 Apr 2011
Handle: RePEc:pra:mprapa:30138
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