Energy Consumption and Economic Growth in Pakistan
Team Members: Dr. Vaqar Ahmed, Muhammad Zeeshan
The present study investigates the impact of energy consumption on real GDP, capital stock, and labor force using annual data for the period of 1971-2012. For empirical analysis, it employs the Structural Vector Auto-regression (SVAR) framework. The results reveal that economic growth increases the demand for labor force, but this rise is not sustainable. Same is the case for other factors such as capital stock and energy. We see that greater energy inputs are required to facilitate the new additions to capital stock. Further, an exogenous shock to capital stock and labor force stimulates the economic activity temporarily. Rising capital stock also demands greater units of labor as productive activity expands in the economy. The research work recommends the government to focus on its supply-line. A certain and affordable power supply is the need of time.