Energy Use for Economic Growth: Cointegration and Causality Analysis from the Agriculture Sector of Pakistan (original) (raw)
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Economic growth and energy consumption nexus in Pakistan
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Environmental Science and Pollution Research, 2020
The present study seeks to investigate the sector-level energy consumption of oil and natural gas and to explore the linkage between economic growth, households, agriculture, industry, power, fertilizers, and commercial sector in Pakistan for the period of 1980-2016. The energy sector of Pakistan is facing severe crisis from the last few years due to inadequate production and supply. Long-lasting deficits of natural gas and oil, the two supreme types of fuel in Pakistan, had detrimental consequences for the growth as well as for the economic development. An autoregressive distributed lag (ARDL) method and Granger causality test under vector error correction model (VECM) were employed to check the association among the variables. Furthermore, the innovative accounting method was used to investigate the responsiveness of each variable to another within the study framework. Empirical results show long-run association among the variables, as oil consumption in the agriculture and power sector show a positive effect on Pakistan's economic growth. Similarly, energy consumption from natural gas in the households and fertilizers as well as in the industry sector has had a constructive association with economic growth. In contrast, energy consumption from oil in the households and industry sectors has adverse association with economic growth, while natural gas consumption in the commercial sector has negative linkage with economic growth. Possible steps should be taken by the Government of Pakistan to enhance the production of oil and natural gas from other alternatives to meet the requirements of these sectors.
Disaggregate Energy Consumption, Agricultural Output and Economic Growth in Pakistan
The basic goal of the study is to make a vigorous endeavour to analyse the impact of energy consumption (i.e., electricity, oil and gas) on economic growth and agriculture sector output in Pakistan. It is desirable to find out relationship between disaggregate energy consumption, economic growth and agricultural sector outputs of Pakistan because energy crisis has become a central issue now-a-days. Production sector of Pakistan relying on electricity and gas consumption to large extent and these sources of energy are falling short because of many reasons which is upsetting output and consequently exports and real output of the country. To analyse the relationship, we employed time series data ranges from 1972 to 2011 from a reliable source. To find out long run and short run effects of energy consumption on Agricultural output and economic growth, ARDL modelling approach to cointegration is applied which is most appropriate technique over some other techniques of integration after scrutinizing the stationarity of data through ADF Test. Where, bound testing procedure is utilized for cointegration to judge the existence of long run relationship among variables and ECM models are formulated for short run analysis. Our econometric models give the intuition of including agricultural output and economic growth as dependant variables and electricity, coal and gas consumption as independent and core variables. The findings of the study indicate that Gas and Oil consumption turns out very efficient factors for raising economic growth and Agricultural output.
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Energy is considered a key ingredient for economic growth of a country. It increases not only the employment but also the living standards of individuals. This paper has objective to find the extensive association between energy consumption and economic growth in Pakistan from the periods of 1978 to 2012 by applying Johansen co integration, error correction model and the granger causality test which present the unidirectional causality between energy consumption and economic growth, it starts from consumption to growth. The results also conclude that less prices and drop off energy shortfalls, favourable policies and reduced uncertainty may lead to economic growth for Pakistan. This study also defines the significance of energy sector and suggests direct investment in this sector by utilizing local energy resources.
ENERGY CONSUMPTION AND ECONOMIC GROWTH: Evidence from Pakistan
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