Journal
GLOBAL BUSINESS REVIEW
Volume 17, Issue 5, Pages 1037-1059Publisher
SAGE PUBLICATIONS LTD
DOI: 10.1177/0972150916656655
Keywords
Energy consumption; economic growth; financial development; Pakistan
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This article explores the relationship between financial development and energy consumption by incorporating economic growth, agriculture and modern sectors in Pakistan over the period 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.
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