Renewable and non-renewable energy consumption and economic growth in Pakistan: a disaggregated analysis

Using Toda-Yamamoto Granger causality approach, we study causality between energy consumption (EC) and economic growth (GDP) in Pakistan for the period 1972-2015. The study extended the basic production function having labor and capital as the mainstream variables by adding major energy sources of Pakistan. The results confirmed a unidirectional relationship between hydroelectricity consumption (HEC) and nuclear energy consumption (NEC) and a bidirectional relationship between fossil fuel consumption (FFC) and GDP, respectively. The findings suggest an efficient utilization of existing energy resources along with diversification and expansion of the cleaner energy resources. Furthermore, the government should avoid energy conservation policies as they can hamper GDP growth in Pakistan.