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Does urbanization cause increasing energy demand in Pakistan? Empirical evidence from STIRPAT model

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  • Shahbaz, Muhammad
  • Chaudhary, A. R.
  • Ozturk, Ilhan

Abstract

This paper reinvestigates the relationship between urbanization and energy consumption in case of Pakistan for the period of 1972Q1-2011Q4 by employing the STIRPAT (Stochastic Impact by Regression on Population, Affluence and Technology) model. We have employed the ARDL bounds testing approach to cointegration in the presence of structural breaks stemming in the series to count for these missing elements in other studies. Finally, the VECM Granger causality approach has been applied to examine the causal relationship between the variables. Our results show that urbanization adds in energy consumption. Affluence (economic growth) increases energy demand. Technology has positive impact on energy consumption. An increase in transportation is positively linked with energy consumption. The causality analysis indicates the unidirectional causality running from urbanization to energy consumption.

Suggested Citation

  • Shahbaz, Muhammad & Chaudhary, A. R. & Ozturk, Ilhan, 2016. "Does urbanization cause increasing energy demand in Pakistan? Empirical evidence from STIRPAT model," MPRA Paper 70313, University Library of Munich, Germany, revised 19 Mar 2016.
    • Handle: RePEc:pra:mprapa:70313
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    More about this item

    Keywords

    Urbanization; Energy Demand; STIRPAT; Pakistan;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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