Finance-Growth-Energy Nexus and the Role of Agriculture and Modern Sectors: Evidence from ARDL Bounds Test Approach to Cointegration in Pakistan

Muhammad Shahbaz, Faridul Islam () and Muhammad Sabihuddin Butt

MPRA Paper from University Library of Munich, Germany

Abstract: This paper explores the relationship between financial development and energy consumption by incorporating economic growth, agriculture and modern sectors in Pakistan over the period of 1972-2011. The Autoregressive Distributive Lag (ARDL) bounds testing approach to cointegration, assuming structural breaks, confirms cointegration. Innovation accounting approach, used to examine the direction of causality, shows that economic growth causes energy demand. We also fine bidirectional causality between financial development and energy consumption; and between modern sector growth and energy consumption. Energy consumption Granger causes agriculture growth. The results offer valuable insights for policymakers in crafting appropriate energy policy for Pakistan.

Keywords: Energy Consumption; Economic Growth; Financial Development; Pakistan (search for similar items in EconPapers)
JEL-codes: E00 (search for similar items in EconPapers)
Date: 2015-03-02, Revised 2015-03-14
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Citations: View citations in EconPapers (1)

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