Asymmetric impact of renewable and non-renewable energy on the industrial sector in Pakistan: Fresh evidence from Bayesian and non-linear ARDL

Kashif Raza Abbasi, Khadim Hussain, Magdalena Radulescu and Ilhan Ozturk

Renewable Energy, 2022, vol. 187, issue C, 944-957

Abstract: For the last two decades, Pakistan has faced various economic obstacles, the most significant of which is the sluggish pace of industrial expansion caused by the energy crisis. To close this gap, Pakistan's government has made several efforts to save energy and lower the country's power shortage in recent years. To bridge this gap, we concentrate on a few key drivers to demonstrate vibrant recommendations and evidence to policymakers. In this context, the study investigates the asymmetric relationship between renewable energy consumption (REC), non-renewable energy (NRE), terrorism, inflation, and international trade in the industrial sector from 1970 to 2018 in Pakistan. We employed a novel co-integration approach known as a Nonlinear Autoregressive Distributed Lag (NARDL) model with the Bayesian approach. The results show that the industrial sector is increasing due to positive shocks in REC, whereas negative shock in REC decreases significantly at a 5% level. Additionally, NRE, terrorism, and inflation are positive and have a long-term substantial effect on the industrial sector. The results suggest that the most effective strategy for Pakistan is to combat terrorism and vigorously promote renewable energy, highlighting its advantages to the environment and industrial development while avoiding non-renewable resources.

Keywords: Renewable energy; Non-renewable energy; Inflation; International trade; NARDL (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:renene:v:187:y:2022:i:c:p:944-957

DOI: 10.1016/j.renene.2022.02.012

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