Short- and long-run relationships between natural gas consumption and economic growth: Evidence from Pakistan

This paper examines the dynamic relationship between natural gas consumption and economic growth in Pakistan using a multivariate model by including capital and labor as control variables for the period between 1972QI and 2011QIV. The results of the ARDL bound testing indicate the presence of cointegration relationships among the variables. The estimated long-run impact of gas consumption on economic growth is greater than other factor inputs suggesting that energy is a critical driver of production and growth in Pakistan. Furthermore, the results of causality test suggest that natural gas consumption and economic growth are complements. Given that natural gas constitutes to the primary source of energy in Pakistan, the implication of this study is that natural gas conservation policies could harm growth and, therefore, requires the policy makers to improve the energy supply efficiency as well as formulate appropriate policies to attract investment and establish public-private partnership initiatives. (C) 2014 Elsevier B.V. All rights reserved.