The Dynamics of Electricity Consumption and Economic Growth:A Revisit Study of Their Causality in Pakistan

Muhammad Shahbaz and Hooi Hooi Lean ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study revisits the relationship between electricity consumption and economic growth in Pakistan by controlling and investigating the effects of two major production factors - capital and labor. The empirical evidence confirms the cointegration among the variables and indicates that electricity consumption has a positive effect on economic growth. Moreover, bi-directional Ganger causality between electricity consumption and economic growth has been found. The findings suggests that adoption of electricity conservation policies to conserve energy resources may unwittingly decline growth and the lower growth rate will in turn further decrease the demand for electricity. Therefore, governments contemplating such conservationist policies should instead explore and develop alternate sources of energy as a strategy rather than just increasing electricity production per se in order to meet the rising demand for electricity in their quest towards sustaining development in the country.

Keywords: Electricity Consumption; Economic Growth; Ganger Causality (search for similar items in EconPapers)
JEL-codes: F43 Q4 (search for similar items in EconPapers)
Date: 2011-09-01, Revised 2011-09-06
New Economics Papers: this item is included in nep-cwa, nep-ene and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Journal Article: The dynamics of electricity consumption and economic growth: A revisit study of their causality in Pakistan (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:33196

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