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Energy Conservation Policies may affect Trade Performance in Pakistan: Confirmation of Feedback Hypothesis

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  • Raza, Syed Ali
  • Shahbaz, Muhammad

Abstract

This study investigates the relationship between energy consumption and trade performance in Pakistan by using the annual time series data from the period of 1973-2011. The cointegration results confirm the valid long run relationship between energy consumption and trade performance. Our results indicate that gross domestic product, exports and imports have positive impact on energy consumption. The findings of Generalized forecast error variance decomposition method under vector autoregressive (VAR) system suggest the bidirectional causal relationship of gross domestic product, exports and imports with energy consumption. This confirms the presence of feedback hypothesis in Pakistan. We note that energy conservation policies will reduce the trade performance which leads to decline in economic growth in Pakistan. The present study may guide policy makers in formulating a conclusive energy and trade policies for sustainable growth for long span of time.

Suggested Citation

  • Raza, Syed Ali & Shahbaz, Muhammad, 2014. "Energy Conservation Policies may affect Trade Performance in Pakistan: Confirmation of Feedback Hypothesis," MPRA Paper 57775, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:57775
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    More about this item

    Keywords

    Energy; Trade; Growth; Pakistan;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F1 - International Economics - - Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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