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Renewable and nonrenewable energy consumption, real GDP and CO2 emissions nexus: a structural VAR approach in Pakistan

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  • Muhammad, Shahbaz Shabbir
  • Muhammad, Zeshan
  • Muhammad, Shahbaz

Abstract

Any rise in real GDP crafts higher energy demand in Pakistan. This short-term rising energy requirement is fulfilled with the help of nonrenewable and renewable energy consumption, but nonrenewable energy consumption adds more in it. The rise in nonrenewable energy consumption lifts real GDP up in short-run. Forecast error variance decomposition illustrates nonrenewable energy consumption alone passes 87% variation in the CO2 emissions. This verifies fossil fuels are accountable for environmental degradation in Pakistan. The CO2 emissions worsen economic activity, real GDP falls but renewable energy consumption augments. This elevation in renewable energy consumption is the proof of stabilization efforts that are being initiated by official authorities as CO2 emissions reach to alarming level. The rise in renewable energy consumption boosts economic activity, and real GDP breeds. Most of times, an increase in renewable energy consumption is an effort to substitute it with nonrenewable energy consumption, resulting in lower level of CO2 emissions.

Suggested Citation

  • Muhammad, Shahbaz Shabbir & Muhammad, Zeshan & Muhammad, Shahbaz, 2011. "Renewable and nonrenewable energy consumption, real GDP and CO2 emissions nexus: a structural VAR approach in Pakistan," MPRA Paper 34859, University Library of Munich, Germany, revised 18 Nov 2011.
  • Handle: RePEc:pra:mprapa:34859
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    References listed on IDEAS

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    Cited by:

    1. Nasre Esfahani, Mohammad & Rasoulinezhad, Ehsan, 2016. "Revisiting the relationships between non-renewable energy consumption, CO2 emissions and economic growth in Iran," MPRA Paper 71124, University Library of Munich, Germany.
    2. repec:eee:eneeco:v:64:y:2017:i:c:p:170-176 is not listed on IDEAS
    3. Mohamed Abdouli and Sami Hammami, 2017. "Exploring Links between FDI Inflows, Energy Consumption, and Economic Growth: Further Evidence from MENA Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 42(1), pages 95-117, March.
    4. Syedah Shan E Ahmad, 2015. "Recognizing Novel Red Sea Conservation Strategies Solving Environmental Issues and CO2 Storage," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 3(3), pages 156-161, September.

    More about this item

    Keywords

    Energy Consumption; Real GDP; CO2 Emissions;

    JEL classification:

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

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