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Energy conservation policies, growth and trade performance: Evidence of feedback hypothesis in Pakistan

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  • Raza, Syed Ali
  • Shahbaz, Muhammad
  • Nguyen, Duc Khuong

Abstract

This study investigates the energy–growth–trade nexus in Pakistan by using the annual time series data for the period of 1973–2013. Our main results show: (i) the presence of long-run link between energy consumption and trade performance; (ii) positive impact of gross domestic product, exports, and imports on energy consumption; (iii) bidirectional causal relationship between exports and energy consumption, and also between imports and energy demand; and (iv) bidirectional causality between gross domestic product and energy consumption points to the presence of feedback hypothesis in Pakistan. We therefore note that energy conservation policies will reduce the trade performance which in turn leads to decline in economic growth in Pakistan. The present study may guide policymakers in formulating a conclusive energy and trade policies for sustainable growth for long span of time.

Suggested Citation

  • Raza, Syed Ali & Shahbaz, Muhammad & Nguyen, Duc Khuong, 2015. "Energy conservation policies, growth and trade performance: Evidence of feedback hypothesis in Pakistan," Energy Policy, Elsevier, vol. 80(C), pages 1-10.
    • Handle: RePEc:eee:enepol:v:80:y:2015:i:c:p:1-10
    DOI: 10.1016/j.enpol.2015.01.011
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    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • F10 - International Economics - - Trade - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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