Coal Consumption and Economic Growth Revisited: Structural Breaks, Cointegration and Causality Tests for Pakistan

Saten Kumar and Muhammad Shahbaz

MPRA Paper from University Library of Munich, Germany

Abstract: A global profusion of coal provides many countries with opportunities for economic growth. The direction of causality between coal consumption and economic growth is useful for policy making, however, existing empirical evidence have failed to reach a consensus. This paper examined the liaison between coal consumption and economic growth for Pakistan over the period 1971-2009. The endogenous two-break LM unit test, derived in Lee and Strazicich (2003), is used to assess the order of integration of the variables and structural breaks in the data series. Application of the Autoregressive Distributed Lag (ARDL) bounds test reveals a cointegrating relationship between real income, real capital stock, labour and coal consumption, and further application of General to Specific (GETS), Engle and Granger (EG), Stock Watson’s Dynamic Ordinary Least Squares (DOLS) and Phillip Hansen’s Fully Modified Ordinary Least Squares (FMOLS) methods show statistical robustness of the estimates. The elasticity with respect to coal consumption is positive and significant. The Vector Error Correction Model (VECM) based Granger causality test is also applied for both short-and long-run situations.

Keywords: Coal consumption; economic growth; cointegration; Granger causality (search for similar items in EconPapers)
JEL-codes: C22 Q40 (search for similar items in EconPapers)
Date: 2010-10-20
New Economics Papers: this item is included in nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/26151/1/MPRA_paper_26151.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:26151

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().