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The Electricity Consumption and Economic Growth Nexus in Pakistan: A New Evidence

  • Atif, Syed Muhammad
  • Siddiqi, Muhammad Wasif

This study examines the Granger causality between electricity consumption and Gross Domestic Product (GDP) for Pakistan using annual data covering the period 1971 to 2007. Augmented Dickey-Fuller test and Phillips-Perron test reveal that both the series, after logarithmic transformation, are non-stationary and individually integrated at order one. Engle and Granger Cointegration test exhibits the absence of long-run relationship among the variables. Two tests of causality, standard Granger Causality test and Modified WALD test (T-Y test) affirm the existence of unidirectional Granger causality from electricity consumption to economic growth without any feedback effect. Therefore, an immediate effort to increase electricity availability is required and energy conservation policies are supposed to halt the economic growth.

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File URL: http://econstor.eu/bitstream/10419/65688/1/AtifSM_EconomicGrowthAndElectricityConsumption_TodaYamamoto.pdf
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Paper provided by ZBW - German National Library of Economics in its series EconStor Preprints with number 65688.

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Date of creation: 12 Feb 2010
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Handle: RePEc:zbw:esprep:65688
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  2. Asafu-Adjaye, John, 1999. "The relationship between energy consumption, energy prices and economic growth: Time series evidence from Asian developing countries," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 123754, Australian Agricultural and Resource Economics Society.
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  16. Kumar Narayan, Paresh & Singh, Baljeet, 2007. "The electricity consumption and GDP nexus for the Fiji Islands," Energy Economics, Elsevier, vol. 29(6), pages 1141-1150, November.
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