Renewable Energy Consumption and Economic Growth in Pakistan

The present study investigates the relationship between energy (renewable and nonrenewable) consumption and economic growth using Cobb¿Douglas production function in case of Pakistan over the period of 1972¿2011. We have used the ARDL bounds testing and Gregory and Hansen (1990) structural break cointegration approaches for the long run while stationarity properties of the variables have been tested applying Clemente-Montanes-Reyes (1998) structural break unit root test. Our results con¿rm cointegration between renewable energy consumption, nonrenewable energy consumption, economic growth, capital and labor in the case of Pakistan. The ¿ndings show that renewable and nonrenewable energy consumption both add in economic growth. Capital and labor are also important determinants of economic growth. The VECM Granger causality analysis validates the existence of feedback hypotheses between renewable energy consumption and economic growth, nonrenewable energy consumption and economic growth, economic growth and capital